S.Korea Aug factory activity shrinks by most in two years – PMI

A manufacturing facility is seen in Incheon, South Korea, Might 30, 2016. REUTERS/Kim Hong-Ji

SEOUL, Sep 1 (Reuters) – South Korea’s manufacturing facility exercise shrank in August by the sharpest tempo in two years, on weakening demand amid excessive inflation, rising rates of interest and the struggle in Ukraine, a private-sector survey confirmed on Thursday.

The S&P International buying managers’ index (PMI) fell to a seasonally-adjusted 47.6 in August from 49.8 in July, remaining under the 50-mark that separates enlargement from contraction in manufacturing facility exercise for a second month and hitting the bottom since July 2020.

Output and new orders weakened by the sharpest since June 2020, whereas new export orders fell by probably the most since July 2020.

“Companies usually commented on issues that the financial system would proceed to carry out poorly amid weak demand and difficult world financial situations,” mentioned Usamah Bhatti, economist at S&P International Market Intelligence.

“The outlook for output over the approaching yr dimmed in August as concern that the financial slowdown would deepen grew amongst producers, whereas companies additionally famous the lingering impression of inflation and the struggle in Ukraine.”

The weaker demand did nevertheless assist ease worth pressures. Enter and output costs rose by the slowest charge in 19 and 18 months, respectively.

There have been additionally indicators of enchancment in provide chain snags. Suppliers’ supply occasions, which present the diploma of disruption, deteriorated, however by the least in 21 months, whereas the backlog of labor decreased for the primary time in 22 months, as corporations have been capable of full work in hand amid weak influx of latest orders.

Producers remained optimistic over the approaching yr for output, however the degree of optimism was the weakest since October final yr.

Reporting by Jihoon Lee; Enhancing by Sam Holmes

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