South Korea will see better exports this year as an indicator of South Korea’s manufacturing sector performance increased to a seven-month high in December. The survey conducted by Markit Economics and HSBC shows that the headline purchasing managers’ index or PMI which is meant to measure the health of the manufacturing industry increased 50.8 in December from 50.4 in November.
It is to be noted that a PMI reading above 50 indicates expansion of the sector that augers well for the national economy of South Korea. The report says that PMI reaching above 50 has given hopes, particularly when it was the third successive month in which it signaled an improvement in operating conditions.
The PMI has been Up for Five Consecutive Months Since July
The report further says that the PMI has been up so far in 2013 and has steadily risen for five consecutive months since July. As the country is seeing higher production which expanded for the third successive month in December 2013, and new export orders are being received, there is a lot of hope for better economic growth in 2014.
Better growth in the manufacturing sector which is at a seven-month high is helping employment generation which according to the study increased in December. Additionally, South Korea’s exports forecast to grow the most this year since 2011. This is attributed to the fact that shipments of mobile phones and automobiles increased lately.
Better Estimates for 2014
The report from the Ministry of Trade, Industry and Energy further indicates that overseas shipments in Asia’s fourth-largest economy will increase 6.4 percent in 2014. This is happening as an estimated 2.2 percent gain was seen in 2013 which was better when compared with a 1.3 percent decline in 2012. The major gainer is Samsung Electronics Co.
Despite the fact that won is expected to consolidate its position against Japanese yen South Korea will sustain higher exports. Samsung Electronics Co. has posted record third-quarter earnings on demand in emerging markets for its smartphones. Similar results are available for Hyundai Motor Co. which has received higher profit thanks to an increase in the demand of cars in China.
Falling yen has helped Japanese exports; however, at the same time South Korea may lose the market share if it continues to fall as the two countries have more or less same target market for their goods and equipments. China and the U.S. economies are faring comparatively better; these two countries are prospective markets for both South Korea and Japan.
To contact the reporter of this story: Jonathan Millet at email@example.com