Industrial Production Down 0.6% in January This Year... Negative Growth Returns After 8 Months (Update)

Statistics Korea, January Industrial Activity Trends

[Sejong=Asia Economy Reporter Joo Sang-don] Industrial production turned negative for the first time this year. This marks a decline again after eight months since last May (-1.5%).

According to the January Industrial Activity Trends released by Statistics Korea on the 2nd, total industrial production decreased by 0.6% compared to the previous month due to reduced output in manufacturing, services, and construction sectors.

Manufacturing production decreased by 1.6% month-on-month as automotive production (12.8%) increased, but electronic components (-9.4%) and other transportation equipment (-12.4%) declined. Other transportation equipment includes production of container ships, aircraft parts, and other ship and aircraft-related items.

Manufacturing output fell by 1.7% month-on-month despite increases in automobiles (12.8%) and tobacco (19.3%), due to decreases in electronic components (-9.4%) and other transportation equipment (-12.4%).

Manufacturing inventories increased in semiconductors (8.2%), chemical products (1.8%), and petroleum refining (2.6%), but decreased overall by 0.8% month-on-month due to declines in automobiles (-5.0%), primary metals (-4.1%), and metal processing (-7.4%). The average operating rate in manufacturing dropped by 1.1 percentage points to 73.2% compared to the previous month.

Service sector production decreased by 0.2% month-on-month as increases in finance and insurance (1.3%) were offset by declines in arts, sports, and leisure (-15.4%) and wholesale and retail trade (-0.8%).

Retail sales rose by 1.6% month-on-month, with durable goods such as home appliances (4.8%) and semi-durable goods like clothing (1.0%) increasing, while non-durable goods such as pharmaceuticals (-0.1%) declined.

Facility investment increased by 6.2% month-on-month as investment in machinery including special industrial machinery (11.2%) rose, despite a decrease in transportation equipment such as automobiles (-8.4%). Conversely, construction performance fell by 6.0% month-on-month due to declines in building (-5.4%) and civil engineering (-7.8%) works.

The coincident index, which reflects the current economic situation, fell by 0.2 points month-on-month to 99.5. However, the leading index, which forecasts future economic conditions, rose by 0.3 points month-on-month to 102.7.