South Korea’s manufacturing production, a key pillar of its economy, fell by more than 4% year-on-year in January, marking the steepest decline in 18 months.
According to data released by Statistics Korea on March 9, the Manufacturing Production Index stood at 103.7 points in January, down 4.2% from the same month last year. This is the largest drop since July 2023, when the index fell by 6.6%.
The performance was also weaker compared to the previous month. The seasonally adjusted Manufacturing Production Index for January was 111.6, down 2.4% from December. While some sectors, like other transport equipment (up 2.8%) and pharmaceuticals (up 2.1%), saw increases, industries like machinery (-7.7%) experienced larger declines.
With production declining, shipments also decreased. In January, manufacturing product shipments fell by 7.4% year-on-year, the largest drop in two years. Domestic shipments decreased by 11.8%, while exports fell by 1.2%.
Compared to the previous month, shipments dropped by 6.2%. Domestic shipments fell 2.4%, and exports saw a sharp 10.3% decline. This contrasts with the surge in orders from Japan and China due to stockpiling ahead of expected U.S. tariff increases.
The Purchasing Managers' Index (PMI) for South Korea’s manufacturing sector also showed a downward trend. According to S&P Global, the PMI for February was 49.9, down slightly from 50.3 in January. A PMI reading below 50 indicates a contraction in the sector.
The Federation of Korean Industries has warned that the country’s manufacturing industry is facing an “unprecedented crisis” and called on the government to implement measures like those in competing countries, including tax policies to boost domestic production and improve the sector’s competitiveness.
