Stable Indicators
The HSBC South Korea Purchasing Managers’ Index (PMI) – a composite indicator designed to provide a single-figure snapshot of the health of the manufacturing sector – posted a reading of 49.9 in December, slightly up from 49.0 in November and the highest in 4 months, to signal no broad change in operating conditions.
Output decreased for the ninth month in a row, although at only a fractional rate. New orders, on the other hand, returned to growth for the first time in four months, alongside renewed job creation. Meanwhile, downward pressure on selling costs remained, amid reports of increased competition and lower raw material costs.
Incoming new orders rose at South Korean manufacturers in December, reversing the trend seen in the previous three months. Surveyed panelists attributed the latest rise to new product developments and an increase in domestic sales. That said, the growth rate was only fractional and was below the long-run series average.
Subdued demand conditions were partly to blame for the continued decline in production at South Korean goods producers in December. Output has now fallen for the ninth months in a row, although the latest decrease eased from the previous month to only a marginal rate.
In contrast to new business growth, new exports remained negative for the ninth month running in December. Anecdotal evidence attributed the latest fall to worsening international demand and foreign trade, with some mentioning increased competition - particularly from China. The overall pace of depletion remained weak, however.
Despite output falling and dampened demand, payroll numbers rose for the first time in three months in December, albeit at a marginal pace. Firms linked the recruitment of new staff to future expectations regarding production and incoming new orders. The volume of work outstanding, meanwhile, declined in December. The rate of decrease slowed from the previous month, however, to register only a marginal fall.
The quantity of purchases rose for the second successive month in December, with the pace of increase ticking up slightly from the previous month.
However, the latest rise remained only fractional. Stocks of pre-production goods, on the other hand, continued to fall in December, reflecting low production requirements and weak market conditions.
Average cost burdens for South Korean goods producers remained unchanged in December, following a three-month period of input price falls. Output prices, meanwhile, declined for the fifteenth month running, amid reports of reduced raw material costs and increased price competition.