Report a rare bright spot

Amid lingering concerns about the Korean economy, HSBC yesterday released a report indicating signs of recovery based on its latest gauge of business sentiment in the manufacturing sector.

According to HSBC, the Purchasing Managers’ Index (PMI) reached 52 last month, its highest level in a year. The index was 50.9 in February.

The PMI is based on data compiled by HSBC after surveying manufacturing executives in charge of purchases in five areas: output, new orders, employment, supply delivery times and stock items. If the index is above 50, it means there is improvement in the sector.

“Korea ended the first quarter on a solid note,” said Ronald Man, an economist at HSBC in Asia. “New orders are flowing from both home and abroad, supporting job creation. Even with recent currency movements, manufacturers reported strong demand from both China and Japan.

This shows that the global rebound is still driving growth in Korea.”

HSBC data showed that the volume of new orders received by local manufacturing firms increased for the second consecutive month in March. The increase also was the strongest in 11 months. Reflecting growth in new orders, the survey showed that production output also increased for the first time in three months.

“With [Korean] government spending expected to provide an extra boost to domestic demand, we believe the monetary easing cycle in Korea is over,” Man said.

Last week, the government announced it will come up with a supplementary budget of more than 12 trillion won ($10.76 billion) this year to stimulate the economy. The government had cut the country’s GDP growth outlook to 2.3 percent from 3 percent.

By Lee Eun-joo [angie@joongang.co.kr]