Key insights
- South Korean factory activity expanded at its fastest pace in four years, driven by semiconductor demand. However, rising input costs, fueled by Middle East tensions, pose an inflationary risk. While positive for Korean equities, the impact on US equities is limited to sentiment regarding global growth and potential supply chain disruptions.
SEOUL, May 4 (Reuters) - South Korea’s factory activity expanded at the strongest pace in more than four years in April, as semiconductor demand continued to power both output and new orders, even as the war in the Middle East disrupted some supply of raw materials.
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The purchasing managers index (PMI), published by S&P Global, stood at 53.6 in April, up from 52.6 in March to reach the strongest since February 2022.
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"The wider impact of the war will remain to be seen, but latest PMI data indicated that the conflict had played a part in sustaining demand and production levels, as some firms mentioned that they had received additional orders to help build inventory to protect against further delays and price rises," said Usamah Batti, economist at S&P Global Market Intelligence.
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The rate of input cost inflation surged in April and was the steepest since the series began in April 2004.