SEOUL, June 1 (Reuters) - South Korea’s factory activity extended growth into an eighth straight month in May, a private sector survey showed on Tuesday, thanks to the recovery in global demand although the pace of expansion eased slightly.
The IHS Markit purchasing managers’ index (PMI) for May stood at 53.7, compared with 54.6 in April. The index has held above the 50-mark threshold, which indicates an expansion in activity, since October.
“South Korean manufacturers continued to report a sustained, yet softer improvement in the health of the sector ... as manufacturers reported an easing in rates of growth in both output and new orders in May,” said Usamah Bhatti, economist at IHS Markit.
“Firms also reported a significant slowdown in new business inflows from international clients, as export orders expanded at the softest pace since October 2020.”
The survey also showed cost burdens for firms rose for an 11th straight month, with the gauge of input prices surging to its highest level in over 13 years, as raw material costs sharply increased. Such inflation pressures forced firms to pass higher costs on to customers, with the sub-index for output prices recording the fastest increase since the series began in April 2004.
The sub-index for output stood at 53.4, marking the ninth straight month of growth and compared with 55.3 a month earlier.
Total new orders and export orders both expanded for an eighth month, but those from external clients grew at their slowest pace in seven months.
Still, firms raised staffing levels for a third month to meet increased demand.
Looking ahead, businesses remained strongly optimistic over the coming 12 months, with the gauge of future output index standing at 61.2. That slowed from 64.0 in April but remained above the threshold for a 10th month in a row.
“As demand continued to evolve, firms remained confident that output would rise over the coming year,” Bhatti said.
“This is in line with IHS Markit estimates that industrial production will rise 6% in 2021.” (Reporting by Joori Roh; Editing by Sam Holmes)
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S.Korea's factory activity expands for 8th month on sustained demand - PMI - Reuters
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