SOUTH KOREA: Manufacturing Contracts As Output & Orders Fall

The S&P Global manufacturing PMI fell to 49.0 in December from 50.6, thus signalling that activity fell moderately over the month and also the quarter. It has now been below the 50-breakeven level for three of the last four months. Falling output and orders drove the decline in the overall PMI and business confidence became negative, for the first time since July 2020. The uncertainty over US tariffs and the domestic economic outlook following a month of political instability drove the decline.

• After the New Year holiday period, USDKRW has started today at 1469.75, down 0.2% from Monday’s close. The KOSPI is up 0.1% after falling initially, and the KOSDAQ is 1.0% stronger.
• Political uncertainty remains elevated with new acting President Choi’s advisers wanting to resign, which he rejected. There is concern that these issues will weigh on growth going into 2025.
• The S&P Global PMI reported a significant acceleration in input cost pressures, which drove the highest rise in selling prices in over a year.
• Domestic orders contracted while export orders rose only slightly with weakness from the US and China cited. Work backlogs decreased for the fifth month in the last six and as a result businesses are choosing not to replace voluntary leavers. Overall staff levels are little changed though.