SEOUL (Reuters – South Korea’s factories expanded in November. However, output dropped for the second month straight. These signs indicate that Asia’s fourth-largest country is still struggling to regain its momentum amid persistent supply chain disruptions.

For the fourteenth consecutive month, IHS Markit’s November purchasing managers’ index (PMI), climbed to 50.9, from 50.2 in October.

“Despite the slight rise in headline PMI in November, it masked another successive contraction in output levels. New order growth generally stagnated due to supply shortages hitting demand,” stated Usamah Bhatti economist at IHS Markit.

While output continued to decline due to shortages in materials, particularly in the semiconductors industry, slowing orders placed more pressure on companies.

As a result, total new orders as well as export orders were barely increased as the demand for key Asian markets, such as Japan and Taiwan, was offset by problems in the auto industry.

Manufacturers were also faced with increased costs, as input prices rose at the fastest pace since April 2004 when the survey started. This was due to rising raw material costs.

This caused firms to shift higher costs onto clients. Factory gate inflation reached a 4-month high and staffing levels were reduced for the second consecutive month.

However, firms were positive that the supply chain pressures would decrease in coming years due to global demand recovery and business confidence rising to a 3-month high.

Bhatti stated that “Confidence was underpinned in hopes that supply chain pressures would ease, and the recovery of global demand would accelerate launch and mass production for new products.”

This November’s survey was not reflective of Omicron coronavirus spreading, which could add additional pressure to the supply chains that have been disrupted by the pandemic. Many countries also imposed new border control measures to protect themselves.