SEOUL (Reuters – South Korea’s manufacturing activity grew at the fastest rate for three months in December, but the economy has struggled to gain momentum due to rising global coronavirus incidences and continuing supply restrictions.

IHS Markit’s purchasing managers’ index (PMI), rose to 51.9 in December from 50.9 in November. It remained above the threshold of 50 that signals expansion in activity for the 15th consecutive month.

On Monday, the survey showed that output was continuing to fall due to supply chain constraints. Firms are facing shortages of semiconductor chips and weak demand. However, the rate was the slowest for three months.

The largest portion of the PMI’s weighting is for new orders. They grew faster as domestic demand improved. This offsets slow overseas sales.

Joe Hayes (senior economist, IHS Markit) stated that survey data revealed new export orders fell for the first-time since September 2020. This was attributed by firms to increasing COVID-19 globally, congestion at ports, and lack of shipping containers.

Manufacturers faced continuing cost pressures. They were particularly affected by high prices for oil, metals and ores. Clients paid higher rates.

However, companies remain positive that supply chain pressures will decrease as the global economy improves and new product developments are possible.

After two consecutive months of job loss, there was a pickup in hiring. The rate of growth increased to six months.

However, to see a strong turnaround in manufacturing, supply problems must be resolved.

Hayes stated that “Given South Korea’s prominentity in the electronics and automotive industries, significant improvements in global supply chain will be necessary before we see an acceleration in manufacturing growth.”