Korea’s industrial output, consumption contract in April

[Photo by MK DB]

Korea’s industrial production and consumption both turned downward in April, failing to continue the upward trend seen over the past two months.

According to data released by Statistics Korea on Wednesday, factory output across all sectors was 109.8 in April, when seasonally adjusted, down 1.4 percent from a month before.

The April figure saw the largest fall in 14 months since February last year, a 1.5 percent drop, failing to continue the growth trend in February this year, up 1 percent, and in March, up 1.2 percent. The index uses 2020 data as a benchmark of 100.

Looking at it by segment, manufacturing output fell by 1.2 percent, leading the overall contraction in production. Chipmaking output saw a mere 0.5 percent growth, discontinuing the 35.1 percent surprise surge seen in March. Machinery and pharmaceutical output fell 6.9 percent and 8.0 percent, respectively.

Declines in shipments of manufactured goods, in particular, chips and chemical products, led to a 13.2 percentage point jump in the inventory ratio to 130.4 percent in April, from 117.2 percent in March. That figure is a record high since statistics began to be compiled in 1985. Specifically, semiconductors saw a 20.3 percent fall in shipments and a 31.5 percent hike in inventories.

Output in the service sector fell by 0.3 percent, largely led by wholesale and retail sales, as well as transportation and warehousing.

In particular, public administration activities contracted significantly, with output down as much as 12.4 percent, hitting the largest decline in more than 12 years since February 2011, which posted a 15.3 percent fall. The decline is believed to be attributed to lower spending on public health in line with the exit from the Covid pandemic.

The retail sales index fell by 2.3 percent to 105.2 in April, after seasonally adjusted. This gauge of consumption trends also uses the 2020 figure as a benchmark of 100.

The fall is also the largest decline since November last year when it had a 2.3 percent drop. Retail sales growth turned negative after slowing last month, after a surprising increase of 5.1 percent in February. Sales of semi-durable goods, such as apparel, fell by 6.3 percent mainly due to the base effect after large purchases of apparel in February.

Sales of food, cosmetics, and other non-durable goods were down 1.2 percent, while durable goods, such as communication equipment, computers, and passenger vehicles, saw a fall of 1.7 percent, too.

Facility investment rose 0.9 percent compared to a month before due to an increase in the investment in transportation equipment, such as aircraft.

Concerning the construction segment, output in civil engineering fell by 2.4 percent but, output in architecture increased by 2.4 percent.

The cyclical component of the composite coincident index, which measures present economic activity, rose 0.2 points to 99.9, marking the third months in a row of gains. The cyclical component of the composite leading indicator, which predicts the turning point in the business cycle, fell 0.2 points to 98.0, falling for six months in a row. This suggests that uncertainty remains concerning the timing of the economic recovery.

“The economic cycle has not been favorable lately. There are overall many uncertainties depending on the global recovery of industries, such as semiconductors, electronics, and IT,” said an official from Statistics Korea, offering the assessment that recent economic performance has not been favorable.