South Korea’s exports posted solid gains in October, but cooling momentum in its manufacturing sector highlighted challenges to the global trade recovery from supply chain disruptions and China’s energy shortage.

Exports advanced 24% from a year earlier, compared with economists’ estimate for a 28.5% gain, according to Trade Ministry data released Monday. The value of shipments—at $55.6 billion—was a record for October, a statement from the ministry showed. 

Trade has underpinned the Korean economy through the pandemic, helping offset weakness in domestic consumption as the nation suffered multiple waves of Covid. The resilience in exports displayed in Monday’s data will solidify bets that the Bank of Korea will push ahead with another interest-rate increase at this month’s meeting.

Korea’s trade data is closely watched as an early indicator of global demand. Monday’s report showed the flow of goods around the world remains vibrant, with exports to China jumping almost 25% and sales to other key markets also registering double-digit increases. Chip exports rose by 28.8%. 

A 37.8% rise in Korea’s overall imports for October illustrates strong demand from firms for intermediate goods, boding well for future exports. The ministry said the performance so far puts the economy on track for a record annual export performance. 

The optimism provided by the trade report was partly offset by a separate IHS Markit report that showed Korea’s manufacturing purchasing mangers’ index dipped to 50.2 in October from 52.4 a month earlier. That marks the lowest reading in a year, and indicates the sector barely expanded from a month earlier.  

“October data provided proof that ongoing raw material shortages and supply chain issues began to bite in the South Korean manufacturing sector at the start of the fourth quarter of 2021,” Usamah Bhatti, economist at IHS Markit, said of the PMI report. “Manufacturers noted that ongoing shortages and disruptions impacted the outlook for output over the coming 12 months.”

While exports have held up so far this year, the outlook remains uncertain. A deceleration in China could ripple through other economies, while increased lead times and a shortage of key components could drag on into 2022.

Net exports added 0.8 percentage point to Korea’s expansion last quarter, central bank data showed last week. However, weakness in private spending and investment held overall growth down to a below-consensus 0.3%. 

Economists at Goldman Sachs Group Inc., Citigroup Inc. and Barclays Plc, among others trimmed their 2021 outlook following the gross domestic product data. Nonetheless, they are sticking with a November rate hike call as they expect a rebound in the final three months of the year to largely make up for lost ground.

Today’s trade report showed average daily shipments in October advanced 24% from a year earlier. That compares with a 27.9% rise in September. 

Overall exports of petrochemicals jumped 68.5%, while general machinery rose 12.7% and mobile communication devices were up 15.5%. Shipments of cars fell 4.7%, illustrating challenges from a global shortage of chips for automobile production. 

Total shipments to the U.S. were up by 22.9%, while those to Japan jumped 35.2% and to the European Union gained by 19.6%.