Korea's industrial output in March records largest drop in four years

Korea’s industrial output dropped in March at the fastest pace in four years due to declines in manufacturing production.

Customers shop in a supermarket in Seoul on April 9, 2024. Korea’s factory output fell 2.1 percent on month in March, the first decline in five months, according to Statistics Korea data on Tuesday. [YONHAP]

Korea’s industrial output dropped in March at the fastest pace in four years due to declines in manufacturing production.

Korea’s industrial output fell 2.1 percent on month in March, marking the first decline in five months, after gaining 1.1 percent in February, according to data from Statistics Korea on Tuesday.

It was the sharpest fall since losing 3.2 percent in February 2020.

Industrial output inched up 0.2 percent in March from a year earlier, compared to the on-year increase of 1.7 percent in February, the data showed.

"The decline was largely due to a high base effect," said an official from Statistics Korea, noting that industrial production has grown for the fifth straight quarter in the first quarter helped by export recovery.

Output in the mining and manufacturing sector decelerated 3.2 percent on month in March on falling production of chips and cars. It was the sharpest fall in 15 months.

Output in the service sector also fell 0.8 percent over the same period.

Retail sales, a gauge of private spending, added 1.6 percent on month in March compared to a 3 percent decline the previous month. It was helped by growing sales of food, cosmetics and cars.

But the figure was down by 2.7 percent on an annual basis.

Facility investment sank 6.6 percent in March compared to the previous month, while construction investment decreased by 8.7 percent on month.

On an on-year basis, facility investment decelerated by 4.8 percent, while construction investment decreased by 2.1 percent.

“Volatility in the monthly production of mining and manufacturing was large, but the revitalization of the export and key manufacturing sectors in the first quarter implies a recovery trend” for Korea’s economy, said the Ministry of Economy and Finance in a statement.

"Spending on goods rebounded in March, and domestic conditions have shown a gradual improvement in the first quarter centered on services," it said, noting the expansion of inbound passengers and an advance in card payment.

The total amount of approved card payments in the first quarter was 290.9 trillion won ($211 billion), up 4.8 percent on year, according to data by the Credit Finance Association.

BY JIN MIN-JI [jin.minji@joongang.co.kr]