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South Korea & Taiwan PMIs Present Mixed Backdrops, Global Trade Growth May Have Troughed

ASIA

The South Korea and Taiwan PMIs presented contrasting pictures for July. The South Korea headline reading rose to 49.4 from 47.8 prior. This is the highest reading since July 2022, albeit while remaining in the contraction zone. The output index rose to 47.2 from 46.5 in June. New orders were also up in the month. It also comes after July trade figures released earlier showed export growth stepping down in July.

  • In contrast, the Taiwan PMI eased back to 44.1 from 44.8 in June. We remain above the late 2022 lows for the series, but this is still the weakest print since November last year.
  • Output fell to 39.9 versus 42.7 in June, while new orders also weakened.
  • The average headline South Korea and Taiwan PMIs have a reasonably relationship with global trade volumes, see the chart below. At this stage, the average reading is suggesting that global trade growth may well have troughed, but any upswing is unlikely to be dramatic in the near term.

Fig 1: South Korea & Taiwan PMI Average Versus Global Trade Growth

Source: MNI - Market News/Bloomberg

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