S. Korea reports fall in all three industrial activity measures in July

Kim Bo-kyung, a senior official at Statistics Korea, announces the trends in industrial activity at the government complex in Sejong, on Aug. 31. [Photo by Yonhap]

South Korea experienced a simultaneous decline in industrial production, consumption, and investment last month, marking the first time in six months that all three indicators, which reflect industrial activity, have recorded negative growth figures since January.

The government said this can be attributed to lingering external uncertainties surrounding the Chinese economy, combined with temporary factors such as adverse summer weather and a decline in car sales. This situation also indicates that the anticipated economic rebound in the second half of the year has not materialized as expected.

According to Korea Statistics on Thursday, the seasonally adjusted industrial production index for July (excluding agriculture, forestry, and fisheries) stood at 109.8 (base year 2020=100), down by 0.7 percent compared to the previous month.

Industrial production gained momentum for 2 months between May and June but started to fall again in July. July’s decline came from shrinking public-sector spending, which dropped by 6.5 percent.

Production in the mining and manufacturing sectors declined by 2 percent. While manufacturing production in apparel, electric devices, and medicines grew, that of electric components and chips fell.

The manufacturing inventory ratio rose 11.6 percentage points from the previous month to 123.9 percent.

Chip production plunged by 2.3 percent from the previous month.

Production in the service sector was up 0.4 percent, mainly led by financial and insurance sectors showing robust performance, despite falling sales in restaurants and accommodation services affected by unprecedented rainfalls during the summer.

Facility investment was down 8.9 percent from the previous month, the largest decline in 11 years and 4 months since March 2012.

The decline was led by decreased vehicle purchases by corporation entities, part of facility investment, with a fall of 22.4 percent from the previous month.

Retail Sales Index, an indicator of retail consumption, dropped by 3.2 percent, the largest in 3 years, because the severe rainfalls hampered outdoor activities.

The Coincident Composite Index, an indicator of the current economic conditions, experienced a decline of 0.5 percentage points to 99.6, marking the second consecutive month of such decline.

On the other hand, the Leading Composite Index, responsible for predicting future conditions, registered a value of 99.3. This figure depicted an increase of 0.4 points compared to the prior month, making its third consecutive month of improvement.