Korea’s industrial output falls in June, demand remains weak

[Photo by Yonhap]

South Korea’s June 2024 industrial production fell in a second consecutive month of declines. Although retail sales and capital expenditure rebounded from the previous month, overall domestic demand remains weak, with both metrics falling short of where they were in 2023.

According to data unveiled by Statistics Korea on Wednesday, the industrial output index fell by a seasonally adjusted 0.1 percent from the previous month to land at 113.1 By sector, public administration output contributed significantly to the decline in the production index with a 5.1 percent drop. The statistics office attributed the decline to the government‘s use of budgets earlier than planned, resulting in lower-than-usual operating expenditures. The mining industry grew by 0.5 percent, with manufacturing rising by 0.6 percent. Semiconductor production in particular rose for the second consecutive month and was up 8.1 percent, the largest increase since November 2023. The semiconductor index also hit a record high of 163.4.

Services production also saw a slight increase of 0.2 percent, with gains in finance & insurance and real estate, offset by declines in arts, sports & leisure, accommodation, and food services. Retail sales, a measure of goods consumption, rose 1 percent after three months of declines.

Retail sales increased 1.1 percent in March 2024 before falling for two consecutive months in April and May. While sales of non-durable goods, such as food and beverages, fell by 0.9 percent, passenger vehicles and other durable goods saw a 5.2 percent increase, and semi-durable goods, including shoes and bags, rose by 0.8 percent.

Capital investment rose by 4.3 percent from a 3.6 percent decline in May 2024. Investment in machinery, including specialty industrial machinery, increased by 6.5 percent, while investment in transportation equipment, such as automobiles, fell by 2.8 percent. However, capital investment was down 2.7 percent from the same month in 2023.