Blame the low new orders and export sales.
South Korea’s Purchasing Managers’ Index (PMI) contracted to 49.1 in July, according to Nikkei South Korea. It went down from the 50.1 reading in June.
The latest survey showed that production fell to the greatest degree in just under two years.
Nikkei said that the decline was caused by an underwhelming trend in new orders. Several companies said there was a decrease in orders from sub-sectors, like automobiles.
This was reportedly the effect of weakening demand for South Korean products, especially from China and Japan.
New export orders also fell for a sixth consecutive month, whilst new orders remained stagnant since June.
IHS Markit senior economist Paul Smith said, “The manufacturing sector continues to struggle in the face of underwhelming demand, with companies reporting that orders from key export markets and those linked to important industries such as autos are down.”
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