The South Korea’s manufacturing PMI slipped to 51.1 in May, down from 52.6 in April.
“Export sales rose for a fifth successive month, but at a modest pace that was the slowest since January,” wrote Markit in its report. “The US remained a source of export growth, but demand from China was reported to have suffered.”
Here are some key points via Markit:
- Output and new orders continue to rise but at slower rates
- Input prices down to sharpest degree for nearly eight years
- Employment rises at solid pace
From HSBC’s Ronald Man:
“Korea’s manufacturing conditions indicate that a broader global rebound is required to drive Korea’s recovery. Because external conditions remain fragile, domestic demand needs to strengthen further to support growth. This may support the Bank of Korea’s surprise rate cut in May. Looking ahead, should global economic activity fail to pick up meaningfully as we expect, this may prompt policymakers in Seoul to deliver more easing measures.”
South Korea is a key exporter to mainland Asia, so it’s a key bellwether of what’s going on in China.
Recently, economists have been concerned about the negative effects of Japan’s weak yen policy.
“A number of companies added that the weakness of the yen was improving the competitiveness of Japanese rival manufacturers,” said Markit. “A weaker yen did, however, help to reduce the price of imported goods from Japan. With copper, oil and raw material prices in general reported to have deteriorated, overall input costs were lowered to the greatest degree since July 2005.”
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