South Korea Manufacturing Sector Holds Steady - Markit
02 March 2015 - 11:40AM
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The manufacturing sector in South Korea expanded at a steady
pace in February, the latest survey from Markit Economics revealed
on Monday, with a performance of manufacturing index score of
51.1.
That was unchanged from the January reading, which was the
highest score since April 2013.
It also remained clearly above the boom-or-bust line of 50 that
separates expansion from contraction in a sector.
"Operating conditions continued to improve in the South Korea
manufacturing sector in February. Production rose at the quickest
pace since April 2013, while there was a sustained moderate rise in
total new orders," said Markit economist Amy Brownbill.
Employment levels remained in growth territory, with the rate of
expansion the strongest in just under a year. Meanwhile, downward
cost pressures remained, with both input and output prices
falling.
Output at South Korean goods producers rose for the second
consecutive month, with the latest increase the quickest rate since
April 2013.
Total new orders increased for the third month in a row, marking
the longest period of growth in over a year. Meanwhile, new orders
from abroad rose, with firms commenting on higher demand for new
products, with some mentioning increased trade with Japan and
Germany.
Reports of higher production requirements and stronger demand
conditions subsequently led to a further expansion in the
manufacturing workforce. Although only moderate, the rate of
employment growth was the quickest in 11 months.
Despite greater staff numbers, backlogs of work were accumulated
for the second consecutive month. The increase in volumes of
unfinished work was only very slight, however.
As a consequence of falling raw material costs, in particular
oil, both input and output prices fell. The rate of deterioration
in purchasing costs slowed from the previous month, but nonetheless
remained solid and the second-fastest since May 2013.
Manufacturing charges, meanwhile, declined at the quickest rate
in just under six years. As well as a drop in raw material costs,
some firms commented on intensified competition and price
negotiations with clients as factors behind the latest decrease in
selling prices.
"Growth in new orders from abroad slowed to a marginal pace.
Falling raw material costs, in particular oil, led to a further
fall in overall input prices, while manufacturing charges declined
at the fastest rate in just under six years." Brownbill said.