S. Korea’s factory output up 0.4% in Nov., but challenges remain

[Photo by Yonhap]

South Korea’s factory output snapped its four-month losing streak in November on a recovery in auto and machinery making but a plunge in output of semiconductors, the country’s mainstay export item, and future economic growth indicators suggest a bumpy road ahead for the country’s economy.

According to the data announced by Statistics Korea on Thursday, the seasonally adjusted mining and manufacturing output in November bounced back 0.4 percent from a month ago when it dipped by the biggest pace since the pandemic-hit second quarter of 2020. This was the first on-month gain in five months after losing 1.3 percent in July, 1.4 percent in August, 2.0 percent in September, and 3.5 percent in October.

The monthly gain was mainly led by a 9-percent gain in automobile production and 6.4 percent growth in machinery equipment up 6.4 percent that more than offset a 11-percent loss in semiconductor production due to soft demand for IT products.

This helped the nation’s industrial production in November inch up 0.1 percent on month to 115.3, ending its four-month losing streak.

Against a year ago, factory output fell 3.7 percent due to weak semiconductor and electronic parts production, each falling 15.0 percent and 30.4 percent, respectively.

[Source : Statistics Korea]

By sector, the services sector, including lodgings and restaurants, was down 0.6 percent in November from a month prior.

Retail sales, a barometer of consumption, dropped 1.8 percent to 118.1 partly due to the deadly Halloween crush in Itaewon in October. Both services output and consumption declined for three straight months since September.

“Services output and retail sales remained on the downward trend while the uptick in mining and manufacturing output was too miniscule to confirm on its recovery, suggesting that the economy stays weak,” said Eo Woon-sun, a senior Statistics Korea official.

Sales of semi-durable goods like clothing fell 5.9 percent on month and durable goods like automobiles 1.4 percent. Those of non-durable goods like cosmetics also dropped 0.5 percent, reversing its course from the previous month.

Facility investment added 1.0 percent in November after staying flat in October.

[Source : Statistics Korea]

The cyclical component of composite coincident index, which reflects current economic situations, recorded 101.7, down 0.7 point from a month ago, the first decline in seven months. This was also the fastest fall in 30 months since May 2020 when the world’s economy came to a standstill due to the pandemic.

The cyclical component of composite leading index, which predicts the turning point in business cycle, dropped for a fifth consecutive month by 0.2 point to 99.