Statistics Korea Announces January 2020 Industrial Activity Trends
Total Industrial Production Up 0.1% · Facility Investment Down 6.6%
[Sejong=Asia Economy Reporters Kim Hyunjung and Joo Sangdon] In January this year, the retail sales index recorded its largest decline in 8 years and 11 months. This reflects some impact from the novel coronavirus disease (COVID-19). Statistics Korea expects that the impact will be fully reflected in the February indicators.
According to the 'January 2020 Industrial Activity Trends' released by Statistics Korea on the 28th, retail sales decreased by 3.1% compared to the previous month due to reduced sales of passenger cars, shoes and bags, and cosmetics. This is the largest decline since February 2011, when it recorded -7.0%.
An Hyungjun, Director of Economic Trend Statistics at Statistics Korea, said, "Since December last year, the decrease in Chinese tourists has led to a decline in the travel industry, and retail sales have also dropped due to fewer Chinese tourists at duty-free shops, resulting in decreased duty-free sales. However, since the first domestic confirmed case occurred on January 20, the impact of COVID-19 is limited."
Facility investment decreased by 6.6% compared to the previous month as investments in machinery such as special industrial machinery (-6.0%) and transportation equipment such as automobiles (-8.0%) both declined. Domestic machinery orders increased by 24.0% year-on-year, rising in private sectors including electronic components, computers, audiovisual communication, and public sectors including others. Construction performance also increased by 3.3% compared to the previous month, with both building (3.0%) and civil engineering (4.0%) projects showing growth.
Total industrial production increased by 0.1% compared to the previous month as production rose in services and construction despite a decline in manufacturing. However, compared to the same month last year, production decreased by 0.5% due to declines in manufacturing and construction.
The coincident index's cyclical component rose by 0.3 points month-on-month as construction performance and service production indices increased despite the decline in the retail sales index. The leading index's cyclical component rose by 0.1 points month-on-month as the Kospi and economic sentiment indices increased, offsetting decreases in export-import price ratio and construction orders.
Director An said, "The impact of COVID-19 on overall retail sales and major investment figures was not yet fixed in January and will be reflected in February," adding, "It will be difficult for the economy to recover in February."
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