S. Korea’s manufacturing facility exercise declines in December as companies flip pessimistic, PMI says

By Jihoon Lee

SEOUL (Reuters) – South Korea’s industrial exercise contracted in December as producers’ confidence turned pessimistic for the primary time since mid-2020 on account of uncertainty over state commerce and home politics -United States, a survey of the non-public sector 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, falling under the 50 mark which separates enlargement from contraction for the third time since August.

Manufacturing fell for the fourth consecutive month and the decline was extra pronounced than the earlier month, whereas new orders additionally fell, in keeping with the subindexes.

The deterioration in demand was linked to decrease buyer confidence within the home market, the survey confirmed, whereas export orders elevated solely marginally.

That gloom was mirrored in producers’ sentiment for the 12 months 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, that is the worst scenario because the begin of the info collection in April 2012.

Final month, South Korean President Yoon Suk Yeol was impeached after imposing a short-lived martial legislation on Dec. 3, rising political uncertainty and undermining shopper and enterprise confidence.

“Pessimistic expectations typically stemmed from issues concerning the home financial scenario, in addition to potential U.S. protectionist insurance policies,” stated Usamah Bhatti, an economist at S&P World Market Intelligence.

US President-elect Donald Trump final 12 months promised main tariffs on America’s three largest buying and selling companions – Canada, Mexico and China – that are additionally anticipated to have an effect on companies South Korean firms that function factories in these nations.

Within the newest survey, firms famous that weak overseas demand in China and the US was offset by enhancements in Europe and elements of Asia-Pacific.

South Korea’s trade-dependent economic system barely grew within the third quarter on account of slowing exports. The nation’s export progress is anticipated to gradual to 1.5% in 2025, from 6.3% in 2024, in keeping with the central financial institution.

(Reporting by Jihoon Lee; Modifying by Shri Navaratnam)