South Korea Feb. factory activity falls at sharpest pace since mid-2015

SEOUL — South Korean factory activities in February shrank at the quickest pace since June 2015 as cooling global demand hit new export orders, a private survey showed on Monday.

The headline Nikkei/Markit purchasing managers’ index (PMI) sector fell to 47.8, from 48.3 in January, remaining under the 50-point level that separates contraction from expansion for a fourth straight month. New export orders from the world’s six-largest exporter shrank for seventh straight month.

“Latest PMI data show no sign of recovery in South Korea’s manufacturing sector, with evidence that the struggling global trade cycle is pinching a key exporting market,” Markit economist Joe Hayes said. “For South Korea’s economy to sustain its relatively robust growth path, the domestic economy will need to pick up the slack from overseas markets,” he added.

However, domestic orders also deteriorated in February, with the index for this measure plunging to the lowest since June 2015. This led some manufacturers to shed jobs for a fourth straight month, which fits with the recent announcement of South Korea’s highest jobless rate in nine years.

South Korea’s exports got off to a shaky start in 2019 and analysts saw the exports are unlikely to rebound until the third quarter on slowing demand from China, its biggest trade partner.

With stress on the economy rising and inflation subdued, the Bank of Korea left its base rate unchanged at 1.75% at a meeting on Thursday. —