The manufacturing sector in South Korea slid into contraction in March, the latest purchasing managers’ index from HSBC showed on Wednesday with a score of 49.2.

That’s down sharply from 51.1 in February, and it drops below the boom-or-bust line of 50 that separates expansion from contraction.

The March reading also represents a four-month low score.

“The latest HSBC PMI data signaled a general worsening in operating conditions in the South Korean manufacturing sector. Production declined, having expanded in February at the fastest pace since April 2013. This was underpinned by a fall in new orders, with the rate of decline the fastest in over one-and-a-half years,” said Markit economist Amy Brownbill.

Production declined, alongside a fall in incoming new orders. Subsequently employment growth slowed from February’s 11-month high to only a slight pace, while downward pressures on both input and output prices were observed.

Manufacturing production declined in March for the first time this year, having expanded in February at the fastest rate since April 2013. Similarly, new orders at South Korean manufacturers contracted in March, marking the end of a three-month period of expansion.

Panelists linked the drop in total sales to poor market conditions and to a fall in demand from both the domestic and international markets. Subsequently, new exports orders decreased for the first time since December 2014.

Despite lower production requirements and a fall in sales volumes, manufacturers continued to hire additional staff in March. However, employment growth eased from February’s 11-month high to a slower rate than the long-run series average.

In line with falls in output and new orders, buying activity at South Korean manufacturers declined for the first time since October 2014, although at only a slight rate. Subsequently, stocks of purchases declined in March.

On the prices front, purchasing costs declined in March. The rate of decrease was solid and the third-fastest since May 2013. Meanwhile, charges decreased at the fastest rate in six years, with firms mentioning increased price competition and price negotiations with clients driving down selling prices.

“Employment growth slowed to only a slight rate. Meanwhile, reports of falling raw material prices led to further declines in purchasing prices, while charges decreased at the fastest rate in six years,” Brownbill said.

The material has been provided by InstaForex Company –