Industrial production, consumer spending fall in September

Kong Mi-sook, Director of Economic Trend Statistics at Statistics Korea, provides an explanation of the industrial activity trends for September 2024 at the Sejong Government Complex on the morning of the 31st. (Yonhap)

South Korea’s industrial production and consumer spending fell in September 2024, marking a downturn after a brief recovery the previous month. Although facility investment saw an increase, construction investment continued to struggle, with key economic indicators signaling stagnation in economic momentum.

According to data from Statistics Korea released on Thursday, the seasonally adjusted index for total industrial production, excluding agriculture, forestry, and fisheries, fell by 0.3 percent in September compared to August to hit 113.6. This decline follows a 1.3 percent rise in August, marking the first increase in four months.

In terms of sectors, production in the mining and manufacturing industries dropped by 0.2 percent, with gains in machinery (6.4 percent) offset by a decline in semiconductors (-2.6 percent). Manufacturing production also fell by 0.1 percent, unable to sustain August’s 4.4 percent increase. However, Statistics Korea noted that manufacturing production actually increased when accounting for the number of working days, including the extended Chuseok holiday in 2024.

The service sector recorded a 0.7 percent decrease as production gains in retail (0.9 percent) were outweighed by declines in health and social welfare (-1.9 percent). This is the first drop in the service sector since May, after three consecutive months of growth.

Retail sales, a key measure of consumer goods demand, fell by 0.4 percent from the previous month, reversing August’s 1.7 percent increase. Although durable goods such as passenger cars saw a 6.3 percent rise in sales, non-durable goods like food and beverages declined by 2.5 percent, and semi-durable goods, including clothing, dropped by 3.2 percent. The duty-free sector was particularly impacted by a drop in Chinese tourist numbers, with sales falling by 9.2 percent.

Facility investment rose by 8.4 percent, driven by a 17 percent increase in machinery, including semiconductor manufacturing equipment, even as investment in transport equipment declined by 15.1 percent. Construction work completed, or construction volume, edged down by 0.1 percent, with a 9.9 percent increase in civil engineering offset by a 3.7 percent decline in building construction or a fifth consecutive monthly decrease.

On a quarterly basis, industrial production fell by 0.2 percent in the third quarter compared to the previous quarter, largely due to a 0.5 percent decline in manufacturing. Retail sales dropped by 0.5 percent, continuing a three-quarter downward trend. Facility investment rose by 10.1 percent, rebounding after three quarters of declines, while construction volume contracted by 4.2 percent following a 6.2 percent drop in the previous quarter.

The coincident composite index, which reflects current economic conditions, declined by 0.1 points In September 2024, marking the seventh month without a rebound. The leading composite index, which predicts future economic activity, remained unchanged for the third month in a row.