Manufacturing conditions in South Korea deteriorated at a sharper pace at the end of Q3 2016.
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Production declined at the fastest rate in over one year, driven by a marked fall in total new orders.
Contributing to a decline in new orders was a drop in international demand, which contracted at the fastest pace in over three years. As a result, firms cut back on staffing numbers for the first time in six months
Meanwhile, for only the third time this year so far input prices declined, leading to a further reduction in charges.
Any figure greater than 50.0 indicates overall improvement of sector operating conditions. The headline PMI posted at 47.6 in September, down from 48.6 in August, signalling a sharper deterioration in operating conditions at South Korean manufacturers.
In fact, the latest reading was the lowest in 14 months and contributed to the weakest quarterly average since Q3 2015.
Output at South Korean goods producers declined at the sharpest rate since August 2015. According to panellists, dampened demand, strikes at a number of automobile companies, delays in the development of new products and a challenging economic climate all contributed to a contraction in output.
Also contributing to the marked fall in production was a sharp decline in new orders. In fact, the rate of decrease was the fastest in 15 months.
Data suggested that a contraction in international demand drove the overall decline in total new orders, as new export orders fell at the most marked rate in over three years.
A number of survey respondents mentioned unstable global economic conditions and reduced trade volumes with China. Resulting from worsening operating conditions, manufacturers cut back on their staffing numbers for the first time since March.
As well as falls in both production and sales, firms commented on the restructuring of the labour force as a factor leading to job losses.
Goods producers also reduced their input buying, leading to a further depletion in volumes of preproduction items. On the price front, reports of lower raw material costs stemming from the recent strength of the South Korean won led to a fall in input prices.
This enabled firms to lower their charges to the greatest extent in five months. Panellists also mentioned pressure from clients and efforts to boost sales as factors behind the fall in selling prices. ■