S. Korean Sept output in triple negative on weaker external demand and high prices

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South Korea’s factory output fell for the third straight month in September against the previous month due to weakened chip- and steel-making activity from subdued external demand and flood disaster, while domestic demand turned negative amid strong inflation and rising interest rates.

According to data released by Statistics Korea on Monday, the seasonally adjusted mining and manufacturing output in September fell 1.8 percent from the previous month, extending the losing streak for the third month.

Against a year-ago period, output was 0.8 percent higher.

Manufacturing output fell 1.8 percent in September from the previous month led by contractions of 15.7 percent in metal industry, 4.5 percent in semiconductors, and 3.5 percent in automobiles.

Factory operation averaged 74.5 percent, down 0.8 percentage point from a month ago. Inventory levels added 0.2 percent from a month ago and 9.5 percent from a year ago.

The benchmark Kospi was trading 0.71 percent higher at 2,284.54 on Monday morning. The U.S. dollar trading at 1,420.8 won, down 4.7 won from the previous session.

The country’s overall industrial output including services activity in September slid 0.6 percent on month, also weakening for the third straight month after losing 0.2 percent in July and 0.1 percent in August.

“The manufacturing activity was affected largely by a suspension in major steel production due to flood damage from Typhoon Hinnamnor,” said Eo Woon-seon, an official from Statistics Korea. “Chip production declined amid China lockdown and inventory stockpile.”

Service output edged down 0.3 percent on month in September as wholesale and retail sector lost 2.1 percent and social and welfare 1.0 percent. Accommodation and restaurant sector rose 2.1 percent.

Retail sales, a gauge of private consumption, was off 1.8 percent on month and 0.7 percent on year, returning to the negative after a brief rebound in August following losses from March to July.

Sales of durable goods like automobiles were up 5.8 percent on month in September while those of non-durable goods like food items fell 5.0 percent and semi-durable goods like clothing 3.7 percent on rising consumer prices.

Facility investment dipped 2.4 percent in September from a month ago. Investments in transportation equipment such as vessels rose 11.5 percent while those in machinery fell 6.6 percent.

Against a year-ago period, facility investment rose 12.5 percent.

The cyclical component of composite coincident index, which measures present economic activities, edged up 0.1 point to 102.4 in September. The cyclical component of composite leading indicator, which predicts the turning point in business cycle, inched down 0.1 point to 99.2.

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