Business

S. Korea Factory Activity at 1-1/2-Year High on Export Surge
By Reuters | 01 Feb, 2026

Export demand hit a 5-year high in January, pushing PMI to 51.2, up from 50.1 in December.

South Korea's factory activity expanded at the strongest pace in almost 1-1/2 years in January, as export demand growth surged to a near five-year high, a private sector survey showed on Monday. 

The purchasing managers index (PMI) for manufacturers in Asia's fourth-largest economy, published by S&P Global, rose to 51.2 in January, from 50.1 in December, marking the highest reading since August 2024. 

It was also the first back-to-back rise for the index above the 50-mark, which separates expansion from contraction, since August 2024. 

Output rose for the first time in four months and new orders grew at the sharpest pace since June 2024, sub-indexes showed, while manufacturers' optimism for the year ahead hit the highest since May 2022.

The increase in new export orders was the biggest since April 2021, with demand strong in markets across China, North America and Europe, according to the survey.

"Companies report that new product lines, diversification and favourable conditions in key markets, such as autos and semiconductors, will underpin growth," said Trevor Balchin, Economics Director at S&P Global Market Intelligence.

Asia's fourth-largest economy unexpectedly shrank in the final quarter of 2025, marking the biggest slump in three years on weaker investment and exports, but the global boom in artificial intelligence is set to improve the outlook.

The South Korean government last month raised its growth forecast for this year to 2.0% from 1.8%, citing stronger chip demand for AI investment, while the central bank also flagged an upgrade to its projection of 1.8%.

Other near-term indicators in Monday's survey also pointed to stronger demand, with input purchases rising by the most since August 2024 and backlogs of work increasing by the most in 10 months.

(Reporting by Jihoon LeeEditing by Shri Navaratnam)