Korea marks triple rise in output, consumption, capex for 2nd month in June

[Photo by Yonhap]

South Korea’s factory activity contracted in June against the previous month but overall industrial output including services activity, consumption, and corporate spending rose for a second straight month on the back of improved chip production and shipment.

According to data released by Statistics Korea on Friday, the seasonally adjusted mining and manufacturing output in June fell 1.0 percent in June from the previous month on weak production of automobiles (-12.9 percent) and oil refining items (-14.6 percent).

Against a year-ago period, output declined by 5.6 percent.

Manufacturing output fell 1.1 percent in June from a month ago due to a base effect of a higher growth of 3.0 percent in May. On a quarterly basis, however, manufacturing output rose 3.4 percent in the April-June period from the previous three-month period, gaining for the first time since the first quarter of last year.

The benchmark Kospi was trading 0.45 percent lower at 2,592.21 as of 9:45 a.m. on Friday.

Overall industrial output including services activity rose 0.1 percent in June from the previous month. It is the second straight month of increase after falling 1.3 percent in April.

Chip production rose 3.6 percent in June from a month ago. Shipments increased 41.1 percent, leading to a 12.3 percent reduction in inventory.

Chip exports improved in June, which hit an annual monthly high of $8.9 billion.

Service output was up 0.5 percent on month in June led by finance and insurance and arts, sports, and leisure sectors.

Retail sales, a gauge of private consumption, rose 1.0 percent on month. Sales of non-durable goods like food items and semi-durable goods like shoes and bags fell but those of durable goods such as automobiles increased.

Facility investment was up 0.2 percent, gaining for a third straight month, although the growth slowed from the previous month’s 3.5 percent.

The cyclical component of composite coincident index, which measures present economic activities, fell 0.2 point from the previous month. The cyclical component of composite leading indicator, which predicts the turning point in business cycle, rose 0.3 point.

It is the first time since January and February 2018, in the meantime, that Korea marked a triple gain in industrial production, consumption, and facility investment for a second month.

“The economy is showing a slight improvement in the leading indicators, but we need to keep a close eye on the trend before making any judgment as special factors remain such as the turn of the quarter,” said Kim Bo-kyung, an official from Statistics Korea.