Prime Highlights
- South Korea’s factory activity expanded in December, with the PMI rising to 50.1, signaling growth after two months of contraction.
- Manufacturers expressed strong optimism for 2026, planning new product launches and expansion, led by the automobile and semiconductor sectors.
Key Facts
- New orders and export orders increased for the first time in three months, while input purchases rose at the fastest rate since August 2024.
- Factory output fell for a third consecutive month, though the pace of decline slowed, and output prices hit a nine-month high due to rising input costs.
Background
South Korea’s factory activity moved back into growth territory in December as export demand rebounded, lifting confidence among manufacturers, a private survey showed on Friday.
The S&P Global purchasing managers’ index for manufacturing rose to 50.1 in December from 49.4 in the previous two months. A reading above 50 signals expansion. The improvement followed a recovery in overseas orders and a stronger interest in new products.
Usamah Bhatti, economist at S&P Global Market Intelligence, said companies reported that fresh product launches and better external demand helped boost sales. He added that exports stood out as a key driver behind the turnaround.
The trade-dependent economy had already posted its strongest quarterly growth in nearly four years in the third quarter, supported by solid exports and a revival in consumer spending.
Sub-indexes in the survey showed that new orders increased for the first time in three months. The gain was the strongest since November last year. Export orders also returned to growth, underlining the improving demand picture.
Factory output, however, continued to fall for a third straight month, though the pace of decline slowed compared to November.
Other indicators pointed to better near-term conditions. Firms raised input purchases at the fastest rate since August 2024, while stocks of finished goods dropped at the sharpest pace since May 2025. This suggests that companies are preparing for higher future demand.
Business optimism for the year ahead reached its highest level since May 2022. Manufacturers plan to expand and launch new products, with the automobile and semiconductor sectors leading the way.
Inflation pressures came back. Input costs rose fastest since July 2022, mainly because the currency got weaker. As a result, output prices went up to a nine-month high after falling in November.
The data suggests that South Korea’s manufacturing sector may have turned a corner, though rising costs remain a concern for producers in the months ahead.
