SEOUL- South Korea’s factory activity slipped back to contraction in January on weak domestic sales, a private business survey showed, suggesting persistent pressure on an economy struggling to regain its footing.
Worryingly, the latest survey didn’t reflect the outbreak of a rapidly spreading new coronavirus in China that has claimed scores of lives, disrupted travel and tourism across many countries and stoked fears of a broad hit to global growth.
The Nikkei/Markit purchasing managers’ index (PMI) fell to 49.8 last month, down from 50.1 in December which was the first time in eight months it had gone above the 50-point level that separates growth from contraction.
Despite the latest decline in the headline figure, new export orders recorded its second successive month of growth albeit at a slightly slower pace, marking the first back-to-back expansion since July 2018.
The positive export trend reflected easing Sino-US trade tensions and some improvement in trade relations with Japan, the survey showed.
Total new orders also grew for a second month, but again at a slower rate due to unfavorable demand at home.
“While better export conditions will be a relief, a deteriorating domestic economy will put pressure on the Bank of Korea to inject another round of stimulus,” IHS Markit economist Joe Hayes said. – Reuters
