South Korean factory activity accelerates, but growth in new orders slows
South Korea’s manufacturing activity grew the most in six months last month, but the outlook was cloudy, as growth in new orders won by the country’s exporters slowed, a private-sector survey showed on Monday.
The HSBC/Markit purchasing managers index (PMI) of South Korea’s manufacturing sector rose to a seasonally adjusted 50.4 from 50.2 in October, Markit Economics said, the highest reading since May.
The index stood above 50, the level separating growth from contraction, in manufacturing activity for the second consecutive month, a welcome sign for Asia’s fourth-largest economy, still on an uneven pattern of recovery since late last year.
The sub-index for new export orders dipped to a seasonally adjusted 51.9 from 53.7 in October, suggesting a further acceleration in manufacturing activity would be difficult for the coming months.
“In the absence of even stronger output and new orders, the recovery will likely remain gradual,” Ronald Man, an economist at HSBC in Hong Kong, said. “Therefore, policymakers will likely maintain an accommodative stance for the time being.”
South Korea’s central bank has kept the policy interest rate unchanged at 2.5 per cent since cutting it by 0.25 percentage point in May. Many analysts expect it to hold the rate steady for a while and begin raising it from late next year.
Underscoring the still weak global demand, government data showed on Sunday that South Korea’s exports grew only 0.2 per cent last month from a year earlier.