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

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 battle in Ukraine, a private-sector survey confirmed on Thursday.

The S&P World 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 growth 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 essentially the most since July 2020.

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

“The outlook for output over the approaching 12 months dimmed in August as concern that the financial slowdown would deepen grew amongst producers, whereas companies additionally famous the lingering affect of inflation and the battle in Ukraine.”

The weaker demand did nonetheless assist ease value pressures. Enter and output costs rose by the slowest fee in 19 and 18 months, respectively.

There have been additionally indicators of enchancment in provide chain snags. Suppliers’ supply instances, 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 companies have been in a position to full work in hand amid weak influx of recent orders.

Producers remained optimistic over the approaching 12 months for output, however the stage of optimism was the weakest since October final 12 months.

(Reporting by Jihoon Lee; Enhancing by Sam Holmes)