By Jihoon Lee
SEOUL (Reuters) – South Korea’s factory activity expanded for a second straight month in February but at a slower pace due to weakening overseas demand, especially in Europe and China, a private-sector survey showed on Monday.
The purchasing managers index (PMI) for South Koreanmanufacturers, compiled by S&P Global, stood at 50.7 in Februaryon a seasonally adjusted basis, down from 51.2 in January.
The fall came after the index rose above the 50-mark, which separates expansion from contraction, for the first time in 19 months in January.
“PMI data for February indicated a further improvement in operating conditions midway through the first quarter,” saidUsamah Bhatti, economist at S&P Global Market Intelligence.
“Both output and new orders continued to expand, albeit at softer rates than those seen in January.”
Overseas demand for South Korean goods broadly stalled in February, as stronger demand in the United States, Southeast Asia and the Middle East was offset by weaker sales in Europe and Mainland China, according to the survey.
New export orders rose only marginally, with the sub-index down to 50.3 from 52.4 in January, which was the highest since February 2022.
Separate data earlier this month showed growth in South Korea’s exports was weaker in February than in January but stronger if adjusted for working-day differences, as a surge in semiconductor demand made up for a decline in vehicle sales.
Amid growing demand, the backlog of work rose in February for the first time since October 2022 with manufacturers using up stocks at the fastest pace since December 2022.
Employment rose at the fastest pace in four months, the survey showed.
Suppliers’ delivery times worsened for the seventh straight month, with survey respondents blaming logistical disruptions in the Red Sea and staff shortages, although the rate of deterioration has slowed.
Manufacturers’ optimism for future output remained buoyant but weakened slightly in February, as some firms were still concerned about the timing of an economic recovery.
This story originally appeared on Investing
