By Jihoon Lee
SEOUL (Reuters) – South Korea’s manufacturing unit exercise contracted in December, with producers’ sentiment turning pessimistic for the primary time since mid-2020 as a consequence of uncertainty over U.S. commerce coverage and home politics, a personal sector survey confirmed on Thursday.
The buying managers index (PMI) for producers in Asia’s fourth-largest financial system, compiled by S&P International, fell to 49.0 final month from 50.6 in November, slipping beneath the 50-mark that separates growth from contraction for the third time since August.
Output shrank for the fourth consecutive month in a row and the decline was steeper than the earlier month, whereas new orders additionally fell, sub-indexes confirmed.
The deterioration in demand was linked to weaker consumer confidence within the home market, based on the survey, whereas export orders grew solely marginally.
The gloom was mirrored in producers’ sentiment for the 12 months forward, which fell beneath the 50-threshold separating optimism and pessimism for the primary time since July 2020 and marked the bottom in 4-1/2 years. Excluding the COVID-19 pandemic interval, it was the worst because the knowledge sequence started in April 2012.
Final month, South Korean President Yoon Suk Yeol was impeached after his imposition of a short-lived martial regulation on Dec. 3, elevating political uncertainty and dampening shopper in addition to enterprise confidence.
“Downbeat expectations usually stemmed from considerations surrounding home financial situations, in addition to potential U.S. protectionist insurance policies,” mentioned Usamah Bhatti, economist at S&P International Market Intelligence.
U.S. President-elect Donald Trump final 12 months pledged large tariffs on the USA’ three largest buying and selling companions – Canada, Mexico and China – that are additionally anticipated to have an effect on South Korean corporations working factories within the international locations.
Within the newest survey, corporations famous that abroad demand weak point in China and the USA was offset enhancements in Europe and a number of the Asia-Pacific area.
The trade-reliant South Korean financial system barely grew within the third quarter amid slowing exports. The nation’s export progress is anticipated to sluggish to 1.5% in 2025, from 6.3% in 2024, based on the central financial institution.
(Reporting by Jihoon Lee; Modifying by Shri Navaratnam)
