Factory activity in June declined for 12 consecutive months in Korea, China's production slowdown, export recovery

Factory activity in June declined for 12 consecutive months in Korea, China's production slowdown, export recovery

 

Factory activity in China slowed in June, with the sub-index of new export orders slightly above, while Korean factories are on their longest streak of declines in 19 years.
The S&P Global Manufacturing Purchasing Managers' Index (PMI) sub-index of China's new export orders for June was just above 50, indicating little change in the volume of new business from overseas.
Regarding the PMI index, Chinese companies said on the 3rd that export orders for consumer goods and investment goods have decreased due to the weakening global economic environment, but demand for intermediate goods has increased, Reuters reported on the 3rd.
As for plant operations in South Korea, S&P Global's seasonally adjusted Purchasing Managers' Index (PMI) for South Korea's manufacturing sector fell for 12 consecutive months, the lowest level in June and the longest since 2004.
Regarding the findings of the Korean factories, Reuters said, “Production and new orders fell the most in eight and six months, respectively, which dragged down the headline index.” emphasized,” he said.
The survey found that Korea's June saw a slowdown in demand from major export markets in Asia and Europe, and new export orders also showed the sharpest decline in five months.
"According to the 2023 PMI survey data, operating conditions in the Korean manufacturing sector remain calm," said Usama Bhatti, economist at S&P Global Market Intelligence. Business confidence is at its weakest so far in 2023 amid concerns that it will last longer," he told Reuters.
Wang Zhe, chief economist of Caixin Insight Group, said of China's factory production, "A lot of recent economic data shows that China's recovery has yet to find a stable foundation, as outstanding problems remain, such as a lack of internal growth drivers, weak demand and a gloomy outlook." "The same conclusion was reached by the problems reflected in Caixin China's manufacturing PMI in June, from an increasingly serious job market to rising deflationary pressures and waning optimism," he told Reuters.
"For Asian plants, the worst may be past, but activity lacks momentum as prospects for a strong recovery in China's economy dwindle," said Toru Nishihama, chief economist for emerging markets at Dai-ichi Institute for Life Sciences. "China is dragging its feet in providing stimulus. The US economy is likely to feel the pain of a large rate hike. All of these factors weigh down the outlook for Asian manufacturers," he told Reuters. .
Commenting on the slowdown in Chinese production, Capital Economics' Julian Evans-Pritchard said: "Going forward, Chinese policy support will be key to preventing further slowdown in growth." So far, we have been slow to announce meaningful stimulus measures,” he told The Associated Press on the 3rd.
The Chinese market research firm IHS Markit counted the manufacturing Purchasing Managers' Index (PMI) at 50.5 in June, and the economic magazine 'Caixin' announced on the 3rd.
China's June PMI is slightly higher than the market expectation of 50.2, but slightly lower than the previous month (50.9).
The manufacturing PMI is a leading indicator of the manufacturing economy, and a reading above 50 indicates economic expansion, while a reading below 50 indicates economic contraction.
On the other hand, the official manufacturing PMI of China's National Bureau of Statistics came out at 49 in May, indicating economic contraction for three consecutive months.
While the Chinese government's official PMI is centered on large state-owned enterprises, the market research firm's PMI shows sluggish activity in Chinese factories, including export companies and small and medium-sized enterprises.