Production, Consumption, and Investment Triple Increase in 3 Months (Comprehensive)

Statistics Korea, September Industrial Activity Trends

The view of Gamman Pier at Busan Port, the hub of our exports (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] Despite the resurgence of the novel coronavirus infection (COVID-19), the industrial production, consumption, and investment indicators all rose together in September. This triple increase is the first in three months since June.

According to the "September Industrial Activity Trend" released by Statistics Korea on the 30th, total industrial production (seasonally adjusted, excluding agriculture, forestry, and fisheries) increased by 2.3% compared to the previous month.

Although production decreased in areas such as petroleum refining (-3.0%), production in automobiles (13.3%) and semiconductors (4.8%) increased, leading to a 5.4% rise in manufacturing production, which drove the overall industrial production growth.

In the case of automobile production, the increase was influenced by new car launches and increased exports to North America, while semiconductor production rose due to increased production of memory semiconductors such as DRAM and flash memory.

Service industry production decreased in sectors like finance and insurance (-2.4%), but increased in wholesale and retail trade (4.0%) and transportation and warehousing (2.7%), resulting in a 0.3% overall increase.

The consumption indicator, retail sales, rose by 1.7%. Although sales of durable goods such as passenger cars decreased by 0.7%, sales of non-durable goods such as food and beverages (3.1%) and semi-durable goods such as clothing (1.5%) increased. This was due to increased demand for home-cooked meals amid strengthened social distancing measures and increased purchases of holiday gift sets ahead of the Chuseok holiday in October.

Facility investment decreased by 1.5% in machinery such as special industrial machinery, but investment in transportation equipment such as ships surged by 34.3%, resulting in a 7.4% increase overall.

Construction performance, which reflects actual construction work done by construction companies, increased by 6.4% as both building (7.0%) and civil engineering (5.0%) construction results rose.

Economic indicators also rose together for the fourth consecutive month. The coincident index of economic conditions, which reflects the current economic situation, rose by 0.3 percentage points compared to the previous month. The leading index of economic conditions, which shows future economic prospects, also rose by 0.4 points.

Hyungjun Ahn, Director of Economic Trend Statistics at Statistics Korea, explained, "Although the impact of the COVID-19 resurgence still remains, related industries have improved due to increased exports." He added, "With the coincident and leading indices rising together for four consecutive months, the figures suggest that economic improvement can be expected."

On the same day, Kim Yongbeom, First Vice Minister of Strategy and Finance, presiding over the Innovation Growth Strategy Review Meeting and Policy Review Meeting, said, "Following the successful rebound of the third quarter GDP, the improvement of key indicators in September, the last month of the third quarter, and the significant improvement in economic sentiment in October, the first month of the fourth quarter, further raise expectations for economic recovery." He emphasized, "We will do our best to continue the recovery trend in the fourth quarter through strong measures to revitalize domestic demand."