South Korea's factory activity accelerates despite global slowdown, sees fastest growth in 3 years

According to a private survey, despite a decrease in foreign demand, South Korea’s manufacturing activity growth accelerated in August, with output rising at its strongest rate in over three years.

Seasonally adjusted, the purchasing managers index (PMI) for manufacturers in the fourth-largest economy in Asia, as calculated by S&P Global, increased to 51.9 in August from 51.4 in July.

For four months in a row, the index was over the 50-point threshold that divides expansion from contraction.

“August provided a stronger picture for the South Korean manufacturing sector,” said Usamah Bhatti, economist at S&P Global Market Intelligence.

Output rose at the fastest pace since April 2021, as the increase in new orders quickened, while inflation in input prices slowed to an eight-month low, sub-indexes showed.

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The improvement in demand was broadly led by stronger customer confidence and new client wins in the domestic market, according to the survey.

Expansion in new export orders, however, was the narrowest in six months, as strong demand in parts of the Asia-Pacific region, notably Japan, was offset by weakness in China and the United States.

Official trade data released on Sunday backed the survey’s findings, pointing to the 11th month of gains for South Korea’s August exports but with the pace of growth weakening as demand slowed for computer chips.

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The PMI showed manufacturers’ optimism for the year ahead strengthened to a three-month high last month on hopes for sustained improvements in the domestic and global economies, also helped by plans for the launch and mass production of new products.