SEOUL (Reuters – South Korea’s manufacturing activity slowed in March as the economic fallout of the Ukraine war put strains on firms already dealing with supply chain disruptions.

Markit’s purchasing managers index (PMI), which fell from 53.8 in February to 51.2 in March, was still above the threshold of 50 that signals expansion. This was the 18th consecutive month that saw expansion. However, it was also the lowest level in the last four months.

“South Korean manufacturers reported that sharp price rises and sustained supply chain disruption had hindered production and demand at the end of the first quarter of the year,” said Usamah Bhatti, an economist at S&P Global (NYSE:).

“Moreover, the manufacturing companies noted the effect that economic sanctions on Russia, and the war against Ukraine, had on international demand. Export sales have fallen at an alarming rate since mid-2020.”

In three months, new export orders fell sharply. This was due to respondents being pressured by rising raw materials prices and Russia’s invasion of Ukraine. With the sub-index at 50.4, overall new orders have barely increased.

The output also fell in that month. This was the third contraction in three years.

Friday’s survey showed that input prices have risen further, particularly in oil and metals. It extends the current inflation cycle to 21 months.

Firms remained positive about the future, expressing hope that supply and price imbalances will ease in order to increase demand from home and abroad.