South Korea's manufacturing PMI showed the sector contracted for the fifth consecutive month and at a more pronounced rate in July, with the survey's headline index falling to 48.0 from 48.7 in June. This survey has shown consistent weakness in the sector since mid-2024 and respondents this month reported that global trade tensions have continued to have a significant impact on conditions and sentiment.

Survey respondents reported output and new orders fell in July for the fifth and fourth consecutive month respectively, with new export orders also recording a fourth consecutive decline but at a less pronounced rate. Respondents also reported a second consecutive cut in payrolls and now expect output to fall from current levels over the next twelve months. The survey shows a bigger increase in input costs, with respondents citing the impact of exchange rate moves, but only a modest increase in selling prices.

The Purchasing Managers' Manufacturing Index (PMI) is based on monthly questionnaire surveys of selected companies which provide an advance indication of what is really happening in the private sector economy by tracking changes in variables such as output, new orders, stock levels, employment and prices across the manufacturing sectors.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.