South Korea's Factory Activity Improves in November

By Jihoon Lee

SEOUL (Reuters) – South Korea's factory activity rose in November after two months of decline, driven by improving demand in Asia, according to a private sector survey released on Monday.

The purchasing managers index (PMI) for manufacturers in South Korea, compiled by S&P Global, increased to 50.6 in November, surpassing the 50 mark that signifies expansion over contraction, compared to 48.3 in October.

Usamah Bhatti, an economist at S&P Global Market Intelligence, stated, "November PMI data signalled that the South Korean manufacturing sector saw a renewed improvement in operating conditions." He noted that firms were particularly encouraged by international demand.

New orders increased for the first time in three months, with new export orders growing at the fastest rate since July. Although output fell, the decline was less severe than in the previous month.

Survey respondents highlighted new contracts and product orders from abroad, especially from significant markets in the Asia-Pacific region.

In recent weeks, economic activity in China has improved, aided by Beijing's stimulus measures. This comes as the U.S. braces for the second term of President-elect Donald Trump, who has pledged to impose more tariffs on China.

Last week, South Korea surprised the markets with an interest rate cut and indicated more cuts may follow, as policymakers remain cautious about trade risks associated with Trump's second presidency.

The rebound in export demand last month stretched production capacity, leading to increased backlogs of work for the first time in five months and at the highest rate since June 2022. Additionally, stocks of raw materials and semi-finished goods rose significantly—marking the biggest increase in 14 months.

Manufacturers' optimism for the coming year improved to a three-month high, with hopes for ongoing growth in new product orders and better domestic conditions.