South Korea Dec manufacturing facility exercise shrinks as corporations flip pessimistic, PMI exhibits

By Jihoon Lee

SEOUL (Reuters) – South Korea’s manufacturing facility exercise contracted in December, with producers’ sentiment turning pessimistic for the primary time since mid-2020 as a consequence of uncertainty over U.S. commerce coverage and home politics, a non-public sector survey confirmed on Thursday.

The buying managers index (PMI) for producers in Asia’s fourth-largest economic system, compiled by S&P World, fell to 49.0 final month from 50.6 in November, slipping under the 50-mark that separates growth from contraction for the third time since August.

Output shrank for the fourth consecutive month in a row and the decline was steeper than the earlier month, whereas new orders additionally fell, sub-indexes confirmed.

The deterioration in demand was linked to weaker consumer confidence within the home market, in line with the survey, whereas export orders grew solely marginally.

The gloom was mirrored in producers’ sentiment for the yr forward, which fell under the 50-threshold separating optimism and pessimism for the primary time since July 2020 and marked the bottom in 4-1/2 years. Excluding the COVID-19 pandemic interval, it was the worst because the information sequence started in April 2012.

Final month, South Korean President Yoon Suk Yeol was impeached after his imposition of a short-lived martial regulation on Dec. 3, elevating political uncertainty and dampening client in addition to enterprise confidence.

“Downbeat expectations usually stemmed from considerations surrounding home financial situations, in addition to potential U.S. protectionist insurance policies,” stated Usamah Bhatti, economist at S&P World Market Intelligence.

U.S. President-elect Donald Trump final yr pledged large tariffs on the USA’ three largest buying and selling companions – Canada, Mexico and China – that are additionally anticipated to have an effect on South Korean corporations working factories within the international locations.

Within the newest survey, corporations famous that abroad demand weak spot in China and the USA was offset enhancements in Europe and a number of the Asia-Pacific area.

The trade-reliant South Korean economic system barely grew within the third quarter amid slowing exports. The nation’s export development is predicted to gradual to 1.5% in 2025, from 6.3% in 2024, in line with the central financial institution.