Due to the Impact of COVID-19... February's 'Production and Consumption' See Largest Decline in 9 Years (Update)

Statistics Korea, February Industrial Activity Trends

[Sejong=Asia Economy Reporter Joo Sang-don] It has been confirmed that industrial activities such as production, consumption, and investment sharply contracted last month due to the impact of the novel coronavirus infection (COVID-19). The decline in retail sales and total industrial production recorded the largest drop since February 2011.

On the 31st, Statistics Korea released the 'February Industrial Activity Trends' report containing these details.

According to the report, total industrial production decreased by 3.5% compared to the previous month due to reduced output in manufacturing, services, and construction industries. This is the largest decline in nine years since February 2011, when total industrial production fell by 3.7% due to the foot-and-mouth disease outbreak.

Manufacturing production fell by 3.8% month-on-month as mining and manufacturing decreased despite increases in electricity and gas sectors. Manufacturing output dropped 4.1%, with declines in automobiles and machinery equipment offsetting gains in semiconductors and communication and broadcasting equipment.

Service industry production decreased by 3.5% month-on-month, despite increases in finance and insurance, water supply, sewage and waste management, and real estate sectors. Notably, accommodation and food services, as well as transportation and warehousing, declined. Accommodation and food services fell sharply by 18.1%, with decreases in both restaurants and pubs and lodging businesses.

Consumption also took a direct hit. The retail sales index dropped 6.0% compared to the previous month, with sales of semi-durable goods such as clothing (-17.7%), durable goods such as passenger cars (-7.5%), and non-durable goods such as cosmetics (-0.6%) all declining. This is the largest drop since February 2001 (-7.0%).

Facility investment and construction output also failed to avoid decreases. Facility investment fell 4.8% month-on-month due to reduced investment in transportation equipment such as automobiles (-15.4%) and machinery including computers and office equipment (-0.1%). Construction output (constant prices) declined 3.4%, as decreases in building construction (-5.2%) outweighed increases in civil engineering (1.3%).

The 'Coincident Index of Economic Activity,' which reflects the current economic situation, plunged by 0.7 points compared to the previous month. This is the largest decline in 11 years and 2 months since January 2009 (-0.7 points) during the global financial crisis. The 'Leading Index of Economic Activity,' which forecasts future economic conditions, remained unchanged from the previous month.

An Hyung-jun, Director of Economic Trend Statistics at Statistics Korea, said, "Due to consumption contraction aimed at infection prevention, services and retail sales sharply decreased, and industrial activities overall were sluggish compared to the previous month due to the impact of COVID-19 spread, including significant declines in automobiles and manufacturing caused by parts supply difficulties." He added, "The effects of 'social distancing' and the global spread of COVID-19 will be reflected from March through April."