Korea's industrial output picks up Dec, feeble for 2020 with svc output dn 2%

South Korea’s manufacturing picked up in December on chip line activity, although ending the pandemic-ridden 2020 with a feeble 0.4 percent gain, while service output shriveled 2.0 percent under virus mitigation measures.

The seasonally adjusted mining and manufacturing output in December rose 3.7 percent from the previous month, accelerated from the 0.3 percent gain in November, Statistics Korea reported Friday. Against a year ago, it added 3.4 percent.

Industrial activity for full 2020 rose 0.4 percent from the previous year.

Factory operation averaged 74.5 percent in December, up 0.6 percentage point versus the previous month. Inventory levels fell 0.2 percent on month but rose 1.4 percent on year.

Semiconductors, the country’s key export item, drove the December growth. Production of chips jumped 11.6 percent and machinery equipment 10.0 percent, while automobiles dipped 8.6 percent.

The benchmark Kospi fell 3.03 percent to close Friday at 2,976.21. The Korean won fell 0.50, or 0.4 percent, against the U.S. dollar to 1,118.50.

Service output fell 1.1 percent, turning downward for the first time in four months due to the winter resurgence in virus spread. Accommodations and restaurants plunged 27.3 percent and logistics and storage fell 3.2 percent while finance and insurance rose 4.6 percent. Services fell 2.0 percent for the entire 2020.

Retail sales inched up 0.2 percent in December, snapping the two-month losing streak. Semi-durable goods like clothes dropped 6.7 percent and durables like cars fell 1.7 percent, but non-durables like food gained 3.9 percent as people chose to eat at home to practice social distancing. For full 2020, retail sales fell 0.2 percent, the biggest decline since the 3.1 percent drop in 2003.

Capital investment added 0.9 percent in December from the previous month. Spending in transportation equipment like vessels rose 3.4 percent and machinery like chipmaking equipment gained 0.2 percent. Investment in 2020 expanded 6.0 percent.

The coincident index, reflecting current economic activities, remained unchanged in December after six straight months of gains. The leading indicator, a gauge of where the economy is headed, rose 0.5 point to continue the upward trajectory for the seventh consecutive month, the longest winning streak since the nine-month run from November 2016 to July 2017.

“The resurgence of Covid-19 led to stronger social distancing measures, dealing a blow to the service sector. But industrial activity showed strong growth thanks to the booming chip industry,” said Kim Bo-kyung of Statistics Korea.

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