South Korea's manufacturers cut production at a sharper rate as COVID-19 outbreak leads to factory closures in February, survey data from IHS Markit showed on Monday.
The manufacturing Purchasing Managers' Index fell to 44.4 in February from 50.1 in January. The score signaled the sharpest drop in goods production since June 2015. A score below 50 indicates contraction.
Output decreased at the steepest rate since June 2015, with anecdotal evidence suggesting that factory shutdowns in South Korea were most prevalent in the automobiles sector.
Further, the slump in manufacturing output also reflected supply-side disruptions as input shipments were delayed out of China.
Workloads from overseas were adversely hit in February as demand from key clients in China fell. New export sales declined at the sharpest rate since August 2013.
Looking ahead, however, businesses expect output volumes to be higher than at present levels in 12 months' time.
Joe Hayes, an economist at IHS Markit, said "Unsurprisingly, the South Korean manufacturing sector was hit by a dual-pronged negative shock to the demand- and supply-side of the economy in February amid the COVID-19 outbreak."