South Korea’s Purchasing Managers’ Index (PMI) rose to a six-month high in August at 48.5 from 46.9 in July, according to HIS Markit data. South Korea’s GDP growth rate contracted 3.2pc in April-June quarter due to fall in exports  

 

In August, the PMI score was below the neutral of 50.0 threshold signalling an overall decline in business conditions of South Korean manufacturers. The rate of decline has slowed down mostly in Q2 of 2020. In August there was only a modest fall in production across the manufacturing sector. Reopening of the international market chain helped in improving production in August with gradual recovery across US and Europe from April lows.  

 

Exports however continued to fall in August despite a turnaround in demand across key sectors. Supply chain hassles persisted throughout August resulting in shortage of stock and restricted capacity with suppliers.  

 

South Korea has apparently reached its turning point in August after a steep fall in production Q2 with the latest PMI reading being the highest since February, said Director of HIS Markit. Customer spending in the country is still an issue but demand from overseas is supporting production ramp-up. This is the first time this year that the market is pointing to a positive forecast for the next 12 months. 

 

In Q1, GDP growth rate fell by 1.3pc. Subdued global demand resulted in export slump. Exports is the country’s main ‘engine’ which fell by approximately 16pc compared to prior quarter.  

 

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