SEOUL (Reuters) - South Korea's factory activity slowed in March, as the economic fallout from the Ukraine war added strains to firms already struggling with supply chain disruptions and inflationary pressures, a private-sector survey showed on Friday.
The Markit purchasing managers' index (PMI) fell to 51.2 in March from 53.8 in February, standing above the 50-mark threshold that indicates expansion in activity. It was the 18th straight month of expansion, although it was the lowest in four months.
"South Korean manufacturers reported that sharp price rises and sustained supply chain disruption had hindered production and demand at the end of the first quarter of the year," said Usamah Bhatti, an economist at S&P Global (NYSE:SPGI).
"Moreover, manufacturing firms noted the impact that economic sanctions on Russia and the war with Ukraine had on international demand, with new export sales falling at the fastest pace since mid-2020."
New export orders returned to contraction in three months and posted the sharpest reduction since July 2020, as respondents were reportedly pressured by higher raw material prices and the Russian invasion of Ukraine. Overall new orders barely grew with the sub-index standing at 50.4.
Output also shrank in the same month, the first contraction in three months.
Friday's survey pointed to a further rise in input prices, notably in oil, metals and semiconductors, extending the current sequence of inflation to 21 months.
Still, firms remained optimistic over the coming year about hopes that price pressures and supply imbalances would ease and drive up demand at home and from abroad.