S.Korea factory activity steadies for first time in 17 months, still fragile
By Jihoon Lee
SEOUL, Dec 1 (Reuters) -South Korea's factory activity showed signs of steadying for the first time in 17 months in November, but business conditions remained weak with softening overseas demand and fading optimism among manufacturers, a private survey showed on Friday.
The purchasing managers index (PMI) for South Korean manufacturers, compiled by S&P Global, stood at 50.0 in November on a seasonally adjusted basis, up from 49.8 in October.
The 50-mark separates expansion from contraction on a monthly basis. The factory gauge had contracted for 16 straight months through October, the longest downturn in the survey's history that started in April 2004.
"November PMI data signalled that South Korea's manufacturing sector saw operating conditions stabilise, ending a sequence of declines that began in July 2022," said Usamah Bhatti, economist at S&P Global Market Intelligence.
"That said, anecdotal evidence from panel members indicated that these positive movements masked underlying weaknesses," Bhatti said.
Sub-indexes showed that declines in output and new orders softened to the mildest in 19 months and 16 months, respectively.
However, overseas orders fell by the most in five months, with demand weakening in key markets, most notably mainland China and North America.
Amid sluggish demand, manufacturers registered no change in backlogs of work in November, after 12 months of decline.
South Korea's economy fared better than expected in the third quarter with the expansion underpinned by exports. Its growth is expected to weaken to a three-year low this year, before picking up next year.
On the inflation front, output prices rose in November at the fastest rate in 10 months, as firms responded to higher cost burdens. Input prices rose for the fourth straight month, but the pace softened from the previous month.
Manufacturers' optimism for future output weakened in November to the lowest level in five months amid concerns about continued domestic and global economic weakness.
Reporting by Jihoon Lee; Editing by Kim Coghill
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