- A decline was noted in South Korea’s Manufacturing Purchasing Managers Index (PMI), compiled by S&P Global, settling at 49.9 in December, slightly below November’s 50.0. This threshold separates growth from a downside.
- December marked the fifth consecutive month of reduction in new export orders, possibly due to weaker Chinese demand as highlighted by anecdotal evidence, according to S&P Global factsheet.
- While the ensuing outlook for 2024 remains positive, Trevor Balchin, Director of Economic with S&P Global Market Intelligence, acknowledged it to be slightly subdued. He highlighted, however, the rise in input purchases and quicker pace of employment in December as potential signs of future higher workload.
South Korean PMI Status
The Manufacturing Purchasing Manager’s Index (PMI) for South Korea, reported by S&P Global, exhibited a narrow undershoot in December, registering at 49.9 against November’s 50.0. The 50.0 mark typically serves as the dividing factor between periods of expansion and contraction.
Weak Chinese Demand and Its Effects
In December, new orders for exports recorded a downturn for the fifth consecutive month. The shrinkage echoes an observed weakening in Chinese demand, as brought to light by S&P Global.
Slight Optimism for 2024
“The expectations for 2024 carry an optimistic yet modest undertone. This is manifested by the Future Output Index, which continues to hover under the extended trend”, mentioned Trevor Balchin from S&P Global Market Intelligence. He further noted, “The marginal uplift in input purchases, and the accelerated employment growth rate in December, give rise to an inference of potential increased functional workload in the future.”
Forex Market Implications
The downturn in the South Korean PMI could potentially send ripples through the forex market, influencing the valuation of assets tied to the South Korean Won.