South Korea Factory Growth Slows As Export Orders Shrink

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South Korea Factory Growth Slows As Export Orders Shrink


South Korean factory activity slowed in March, as the economic fallout from the Ukraine war added to tensions for companies already struggling with supply chain disruptions and inflationary pressures.

Markit's purchasing managers' index (PMI) fell to 51.2 in March from 53.8 in February. The manufacturing index is above the 50 threshold indicating expansion in activity. It was the 18th straight month of expansion, although it was the lowest in four months.


"South Korean producers reported that sharp price increases and ongoing supply chain disruptions had hampered production and demand at the end of the first quarter of this year," said Usamah Bhatti, an economist at S&P Global.

Osama added that manufacturing companies noted the impact of economic sanctions on Russia and the war with Ukraine on international demand, with new export sales falling at the fastest pace since mid-2020.

New export orders contracted again in three months and recorded their sharpest decline since July 2020. Respondents were pressured by higher raw material prices and Russia's invasion of Ukraine. Overall new orders barely grew with the sub-index standing at 50.4.


However, the company remains optimistic that price pressures and supply imbalances will ease over the next year and boost demand at home and abroad.

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