South Korea May factory growth slows as output, export orders shrink

South Korea May factory growth slows as output, export orders shrink

© Reuters. FILE PHOTO: View of smokestacks, about 200m (656 feet) high, at a thermal power plant in Inchon, west of Seoul, February 1, 2007. REUTERS/Jo Yong-Hak

SEOUL (Reuters) – South Korea’s factory activity growth slowed in May, as output and export orders contracted amid supply-chain disruptions due to China’s COVID-19 lockdown measures, a private-sector survey showed on Thursday.

The S&P Global (NYSE:) purchasing managers’ index (PMI) fell to 51.8 in May from 52.1 in April but remained above the 50-mark that indicates expansion in activity for the 20th consecutive month.

Output shrank by the most in five months and new export orders decreased for a third month in row, though total incoming orders remained firm thanks to domestic demand.

Sub-indexes showed the backlog of work increased by the most since April last year and suppliers’ delivery times at their worst in five months.

“Supply-chain disruption continued to hinder growth in activity and demand in the manufacturing sector,” said Usamah Bhatti, economist at S&P Global Market Intelligence.

“Material shortages and rising input costs were exacerbated by delays in sourcing and receiving inputs, especially following the reimposition of strict COVID-19 measures in China.”

Output prices rose at their fastest pace since the survey began in April 2004, while increase in input prices slowed for the first time in four months.

Still, manufacturing firms remained optimistic over the coming year for output, with the level of positive sentiment rebounding from two months of weakening.

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