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InvestmentsS.Korea factory activity growth hits 13-month-low on supply crunch By Reuters

S.Korea factory activity growth hits 13-month-low on supply crunch By Reuters


¬© Reuters. FILE PHOTO: A employee walks previous an meeting line of Hyundai Motor’s plant in Asan, South Korea, January 27, 2016. REUTERS/Kim Hong-Ji

SEOUL (Reuters) – South Korea’s factory activity grew at its slowest tempo in 13 months in October, led by a contraction in output and softer demand as shortages of chips and supply chain disruption weighed on the sector.

The IHS Markit buying managers’ index (PMI) for October fell to 50.2 from 52.4 in September, although managed to face above the 50-mark threshold that signifies enlargement in activity, for a thirteenth straight month.

“October data provided proof that ongoing raw material shortages and supply chain issues began to bite in the South Korean manufacturing sector … (pointing) to a broad stagnation in operating conditions,” mentioned Usamah Bhatti, economist at HIS Markit.

Output returned to contraction in simply two months, with the sub-index at 46.6, having shrunk on the sharpest price since July 2020 resulting from important shortages of supplies, notably semiconductors and different electrical parts.

Total new orders and export orders barely grew, with respondents highlighting slowing worldwide demand and difficulties in sourcing freight and container capability.

Sharp (OTC:) rises in uncooked materials prices amid extreme shortages resulted in additional rises in prices at South Korean producers, with enter costs rising on the sharpest tempo in three months.

That led corporations to go greater prices on to purchasers, additionally pushing factory gate inflation to a three-month excessive.

In an effort to guard margins, corporations have been seen lowering staffing ranges for the primary time in eight months.

Meanwhile, corporations continued to fret concerning the ongoing shortages and disruptions, with enterprise confidence easing to its weakest stage since September 2020.

“This is broadly in line with current IHS Markit estimates for industrial production to grow just 0.2% in 2022 following a 6.2% increase in 2021,” Bhatti mentioned.

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