South Korea’s factory activity shrinks for 6th month on tariff concerns: PMI

[SEOUL] South Korea’s factory activity contracted for the sixth straight month in July, as uncertainty over US tariffs weighed on output and orders, a business survey showed on Friday.

The Purchasing Managers Index (PMI) for manufacturers in Asia’s fourth-largest economy, released by S&P Global, fell to 48.0 in July, from 48.7 in June.

The index has stayed below the 50-mark, which separates expansion from contraction, since February.

“July PMI data signalled that the South Korean manufacturing sector experienced a stronger deterioration in operating conditions,” said Usamah Bhatti, economist at S&P Global Market Intelligence.

“Both production volumes and new orders fell at a steeper rate than that in June, with anecdotal evidence indicating that weakness in the domestic economy was compounded by the impacts of US tariff policy.”

The survey was conducted from July 10 to July 23, before South Korea reached on Wednesday a trade deal with the US lowering tariffs to 15 per cent from a threatened 25 per cent.

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In July, output and new orders fell at steeper rates than the month before, although the decline in new export orders contracted at the mildest rate in four months, sub-indexes showed.

Anecdotal evidence pointed to declining export order volumes in the US and Japan in particular, according to the survey.

South Korean manufacturers turned pessimistic about the outlook for the year ahead for the first time in three months, citing concerns over the timing of a domestic economic recovery and ongoing uncertainty surrounding US tariff policy. REUTERS