Korean manufacturers’ domestic supply index down 1.6% in Q2

The domestic supply of manufacturing products in South Korea fell for the third consecutive quarter in the April-June period amid falling demand for locally-made goods.

According to Statistics Korea on Tuesday, the manufacturing domestic supply index stood at 107.1 for the second quarter, down 1.6 percent from the same period a year ago.

The index measures the actual supply value of manufacturing products that are either produced overseas and supplied to domestic markets or produced and shipped domestically.

The index had gained for seven straight quarters from the first quarter of 2021 to the third quarter of last year before turning downward from the fourth quarter.

The decline grew over time from 0.2 percent in the fourth quarter to 0.4 percent in the first quarter and 1.6 percent in the second quarter.

The supply of domestic manufacturing products into domestic markets fell by 2 percent, especially for electronics and communications as well as the chemicals sectors. The decline persisted for the third straight quarter. Imports also witnessed a drop of 0.1 percent, mainly driven by the falling supply of primary metals.

The year-on-year supply of imported products began to decrease for the first time in 12 quarters despite the continued increases since a fall of 0.6 percent in the second quarter of 2020.

Domestic supply of automobiles showed robust growth of 16.4 percent, including an increase of 31.6 percent in imports. The growth was mainly led by the increased imports of foreign automotive products, such as hybrid plug-ins and electric vehicles.

The electronics and telecommunications sector, which encompasses semiconductors, however, saw a decline of 8.9 percent.

The decline was attributed to simultaneous decreases in both domestic demand, with a fall of 14.2 percent, and imports, with a decline of 4.3 percent.

The chemicals sector saw a drop of 5.7 percent, driven by diminishing supplies of diagnostic reagents and polyamide fibers.

In terms of commodities, there was a year-on-year drop of 2.9 percent in final goods. The capital goods employed in industrial operations saw a decline of 3.4 percent. The domestic supply of intermediate goods also decreased by 0.5 percent, attributed to reductions in both domestic production and imports.