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South Korea’s manufacturing sector weakened in March falling to a four-month low with the fastest cut in jobs since late-2008 and political tension with China weighed on demand.
The Nikkei-Markit manufacturing purchasing managers’ index came in at 48.4 in for March, down from 49.2 in February, and remaining below the 50-point line separating expansion and contraction.
Panellists reported employee numbers were reduced in reaction to persistently lower production requirements, seeing labour capacity cut for the seventh consecutive month.
New export orders fell for a second consecutive month amid reports that sales to key export market China had been affected by political tensions surrounding the deployment of a US and South Korean anti-missile system.
Paul Smith, senior economist as IHS Markit said:
March’s PMI data signalled the continued underperformance of the South Korean manufacturing sector. Weak demand is undermining output, which has now fallen for eight months in succession. Based on a strong observed relationship with the PMI, we subsequently expect to see industrial production growth trending towards zero and therefore providing minimal contribution to GDP over Q1.