South Korea’s factory activity shrinks for 7th month on higher US tariffs: PMI
[SEOUL] South Korea’s factory activity weakened for the seventh consecutive month in August, as overseas demand dropped on US President Donald Trump’s higher tariffs, a business survey showed on Monday.
The Purchasing Managers Index (PMI) for manufacturers in Asia’s fourth-largest economy, released by S&P Global, stood at 48.3 in August, up from 48.0 in July.
The index has stayed below the 50-mark, which separates expansion from contraction, since February.
“According to manufacturers, challenging domestic economic conditions and the impact of US tariffs weighed most on the sector, stymieing sales and production levels,” said Usamah Bhatti, economist at S&P Global Market Intelligence.
Output fell for the sixth straight month and new orders extended losses for the fifth month, sub-indexes showed, although their declines were marginally softer than the month before.
New export orders dropped for the fifth month and by the most since April, when Trump introduced 10 per cent baseline tariffs on all imports.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Anecdotal evidence highlighted that US trade policies weighed heavily on external sales, according to the survey.
South Korea’s economy grew in the second quarter at the fastest pace in more than a year, on strong technology exports and a rebound in consumer spending, but faces headwinds from higher US tariffs.
In August, higher 15 per cent tariffs came into force on US imports from South Korea, after the two countries reached a trade deal in late July that avoided a steeper 25 per cent import duty on the Asian nation’s goods.
To help mitigate downward pressure, the liberal administration of President Lee Jae Myung proposed last week a sharp increase in budget spending, while the central bank flagged further policy easing.
South Korean manufacturers turned optimistic about the outlook for the year ahead, buoyed by hopes of new product launches and improvements in domestic economic conditions, the PMI survey showed, though they still cited concerns about the impact of US tariffs. REUTERS
Share with us your feedback on BT's products and services
