SEOUL: Despite supply-chain disruptions and rising raw material costs, South Korea’s factory activity grew for the ninth month in June, thanks to improved global demand. However, record input and output price increases pointed to strains on manufacturers amid supply-chain disruptions and escalating raw material costs. The private IHS Markit purchasing managers’ index (PMI) for June rose to 53.9 from 53.7 in May, the highest level since October.
“The current Manufacturing PMI reading increased from the previous month, indicating that the sector’s health improved steadily during the quarter,” said Usamah Bhatti, IHS Markit economist.
“Both output and new orders increased, with the latter’s growth speeding up from the previous month as firms saw strong client demand sustain new business inflows.”
The output sub-index remained at 53.3, up from 53.4 a month earlier and representing the 10th consecutive month of rise.
Both total new orders and export orders increased for the ninth month in a row, with the rate of growth picking up from May.
However, the poll found that raw material shortages and shipping delays produced a record rise in input prices, forcing businesses to pass on increased costs to customers.
The sub-index for input costs soared to a new high, extending the climb for the 13th month in a row, while the sub-index for output prices also soared to new highs.
“Manufacturers were increasingly expressing concern that severe supply chain disruptions were affecting business. Sharp increases in raw material prices, along with acute supply and freight capacity limitations, resulted to the highest jump in input prices ever recorded “Bhatti remarked. Despite the cost pressures, businesses added employment for the sixth month in a row as new production lines and higher orders necessitated more capacity.
Businesses were upbeat about the next 12 months, citing the prospect of a continuing economic recovery and the assumption that supply chain tensions would lessen, resulting in an increase in demand.
(Jori Roh contributed reporting, and Shri Navaratnam edited the piece.)/n
