South Korea's manufacturing sector shrank for a fourth straight month in May as output and new orders fell more sharply, weighed down by sluggish domestic demand and rising US tariffs, a private business survey showed on Monday. The S&P Global South Korea Manufacturing Purchasing Managers' Index (PMI) edged up slightly to 47.7 in May from 47.5 in April but remained firmly below the 50-mark that separates expansion from contraction. The headline reading signalled the second-steepest deterioration in manufacturing conditions in more than two years, with new orders falling at the fastest pace since June 2020, excluding the pandemic period. Output dropped at the sharpest rate in 31 months. "South Korea's manufacturing sector came into May on unstable footing," said Usamah Bhatti, economist at S&P Global Market Intelligence. "In fact, the decline in new business was the strongest since the initial wave of the COVID-19 pandemic in June 2020." Manufacturers cited continued stagnation in the domestic economy and the impact of elevated US tariffs on both local and export markets, particularly to the US, as key factors behind weaker demand. International orders also declined for the second month in a row, though the rate of decline eased slightly from April. Backlogs of work fell at their fastest pace in nearly five years, while firms continued to draw down inventories and cut purchasing activity. First Job Gains Since October Despite the downturn, manufacturers raised employment levels for the first time since October 2024, with the pace of hiring at its strongest in 20 months. The report attributed the increase to improved business sentiment and hopes for a recovery in global trade and domestic demand. Input cost inflation eased to its lowest level since October 2024, supported in part by falling oil and metal prices, though some firms reported pressure from unfavourable exchange rate movements. Output price inflation also moderated. The data, based on a survey of around 400 manufacturers, were collected between May 12 and 21. Attribution: Amwal Al Ghad English Subediting: Y.Yasser Download
