TOKYO -- South Korea's manufacturing sector showed deterioration in May with weakening demand conditions cutting back output and the export market remaining fragile.
The Nikkei South Korea Manufacturing Purchasing Managers' Index, or PMI, sunk to a three month low of 48.4 in May from 50.2 in April. A reading above 50 indicates an expansion while a reading below 50 points to a contraction.
The contraction was mainly caused by the weakness in demand, with survey respondents noting the rapid decline in new order intakes. Slowdowns in the automobile sector as well as semiconductor related industries lead to negative impacts on their sales.
New exports fell for the tenth successive month. Panelists highlighted the difficult trading environment with clients in countries like Japan, China and other parts of Asia.
"Given the recent re-escalation of trade tensions between the U.S. and China, as well as no real signs of the downturn in the global trade cycle bottoming out, South Korean manufacturers are facing extreme difficulties," according to Joe Hayes, Economist at IHS Markit, which compiles the survey.
Hayes added that "Subsequently, firms moderated their expectations, leading business confidence to dip to its lowest since August 2016."