Trade uncertainty drags South Korea's manufacturing sector in April

This is the third consecutive month of worsening business conditions. 

Trade uncertainty continued to cast a shadow over South Korea's manufacturing sector in April as it saw a significant decline in output and a reduction in new orders.

The seasonally adjusted S&P Global South Korea Manufacturing Purchasing Managers' Index fell to 47.5 in April, down from 49.1 in March, indicating a notable deterioration in the health of the manufacturing sector.

This marks the third consecutive month of worsening condition, and the most pronounced since September 2022. Production levels saw a significant decrease, attributed to falling new orders and the adverse effects of US trade policy.

South Korean manufacturers are expressing concerns about global trade instability and a sluggish domestic economy. This grim outlook has led many firms to implement workforce reductions, with declines in employment, purchasing, and inventory levels reported throughout the month. Notably, business sentiment turned negative for the first time in 2025, reaching its most pessimistic level since the series began in April 2012.

The outlook for production in the upcoming year has turned negative for only the second time since July 2020, with firms becoming increasingly apprehensive about the potential effects of tariffs and stagnation in the domestic economy. The overall degree of negative sentiment amongst manufacturers reached its highest level since 2012, excluding the COVID-19 period.

Moreover, work backlogs decreased for the second time in three months, as companies prioritised completing existing tasks due to a lack of new orders. Manufacturing firms also reduced their workforce for the sixth consecutive month, with job shedding occurring at the highest rate since September 2020.

In April, purchasing activity also saw a solid decline, the strongest since September 2022. Firms reported lowering their stock of inputs and finished goods due to weak demand conditions. Although inflationary pressures eased during the early part of the quarter, input prices remained high. 

Usamah Bhatti, an economist at S&P Global Market Intelligence, said the South Korean manufacturing sector faces significant challenges, with concerns about domestic economic conditions and the impact of US tariffs dominating manufacturers’ outlook for the foreseeable future.