Asia Economy
Manufacturing in South Korea/ Indonesia contracted in October; India in slight rise
By Michael Hennigan, Finfacts founder and editor
Nov 3, 2014 - 6:29 AM

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HSBC PMI data complied by Markit indicated a continued worsening in performance for South Korea’s manufacturing sector in October. Manufacturers signalled a decline in output for the seventh month in a row, though the rate of decrease eased from the previous month. New orders also fell alongside a solid decline in new business from international markets. Consequently, payroll numbers decreased in October for the first time in 12 months. Downward pressures on selling and input prices remained, with the rate of reduction in input prices the quickest recorded since June 2013.

The HSBC South Korea PMI – a composite indicator designed to provide a single-figure snapshot of the health of the manufacturing sector – posted a reading of 48.7 in October, down from 48.8 in September. Operating conditions faced by South Korean manufacturers have now worsened for the second consecutive month. South Korean manufacturers reported a fall in output for the seventh successive month in October. This was underpinned by a modest fall in new business.

Operating conditions in the Indonesian manufacturing sector worsened in October, reversing the modest improvement reported during September. Contractions in output and new orders mirrored the overall deterioration in business conditions. Staffing levels also fell during the month, while inflationary pressures from input costs and output charges intensified.

Adjusted for seasonal influences, the headline HSBC PMI fell to a 14-month low of 49.2 in October, down from 50.7 in September. Since improving at a survey-record pace during June and July, operating conditions have deteriorated in two of the three subsequent months.

Output at Indonesian manufacturers fell in line with the headline index in October, following the modest growth recorded in September. Moreover, the pace of contraction was the joint-fastest since August 2013, albeit moderate overall. Anecdotal evidence linked drops in production to weaker-than-expected demand. October data reinforced reports of falling demand as new orders received by Indonesian manufacturing firms declined for the second time in the past three months.

Similarly, new business from abroad decreased during the month, reversing the moderate expansion observed in September. Panel members associated drops in exports with softening demand from key foreign clients.

Continuing the trend observed throughout the past year, business conditions in the Indian manufacturing sector improved in October. Underpinning the latest overall improvement was accelerated growth of output and new orders. Meanwhile, input costs rose at the weakest pace in 17 months.

Adjusted for seasonal influences, the headline HSBC India PMI rebounded from September’s nine-month low of 51.0 to 51.6 in October. The latest reading was consistent with a moderate improvement in business conditions during the month. Sector data highlighted intermediate goods as the best-performing of the three monitored sub-categories.

Amid reports of stronger demand, production at Indian manufacturers rose for the twelfth successive month in October. Moreover, the pace of output growth accelerated from the prior month and was solid overall. By sub-sector, the sharpest expansion was observed in intermediate goods.

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