Korea's '21 output, consumption, capex all in strong growths for the 1st time in 4 yrs

[Graphics by Song Ji-yoon]

South Korea’s factory activity went strong for the second straight month in December to deliver a sharp increase of near 7 percent for the full year versus a contraction in the first pandemic year of 2020 together with strong recoveries across consumption and corporate investment for the first time in four years.

According to data released by Statistics Korea on Friday, the seasonally adjusted mining and manufacturing output in 2021 jumped 6.9 percent from the previous year after a 0.4 percent fall in the previous year. Manufacturing output rose 7.1 percent on year, driven by a 29.7 percent gain in chips, 18.8 percent in medical precise optics, and 4.6 percent in automobiles.

On Friday, the benchmark Kospi was up 0.36 percent at 2,624.03 in the morning, while the Korean won was trading 1,205 per U.S. dollar, down 1.1 from the previous day’s closing.

Thanks to the robust growth in factory output, the country’s overall industrial output including services activity added 4.8 percent on year in 2021, marking the strongest growth in 11 years.

Services output increased 4.3 percent last year. Output in accommodation and restaurants that was affected by stricter social distancing rules was up 1.4 percent, performance, sports, and leisure 6.9 percent, wholesale and retail 4 percent. Financial and insurance output also gained 8.5 percent and transportation 6.5 percent.

Retail sales, a gauge of private consumption, increased 5.5 percent on year on 12.4 percent higher sales of semi-durable goods like clothing and shoes, 5.1 percent of durable items like automobiles, and 3.1 percent of non-durable goods like cosmetics and medical items.

Facility investment gained 9 percent on year.

It is the first time in four years that Korea achieved triple gains in output, consumption, and investment.

Statistics Korea said that the indices rose on low base effect from 2020 but last year’s output also rose 3.6 percent from 2019.

Eo Woon-seon, an official at Statistics Korea, said that figures showed strong recovery.

In December alone, the seasonally adjusted mining and manufacturing output gained 4.3 percent from the previous month. Against a year-ago period, output was 6.2 percent higher.

Manufacturing output rose 4.8 percent, driven by a 8 percent surge in chips and 7.3 percent in automobiles.

Overall industrial output including services segment in December rose 1.8 percent from a month ago.

Services output fell 0.4 percent in December from a month ago as output in accommodation and restaurants dropped 11.8 percent on enhanced social distancing rules amid spread in variant virus.

Retail sales increased 2 percent while facility investment fell 0.4 percent.

The cyclical component of composite coincident index, which reflects current economic situations, rose 0.7 points to 102.1.

The cyclical component of composite leading index, which predicts the turning point in business cycle, however, fell 0.2 points to 101.2, heading down for six straight months.

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