April Manufacturing Capacity Index Hits Lowest in 1 Year and 8 Months... Decline in Growth Momentum

[Asia Economy Sejong=Reporter Son Seon-hee] In April, the manufacturing production capacity index fell to its lowest level in 1 year and 8 months. This signals a decline in the growth momentum of the manufacturing sector, which can be considered the backbone of the Korean economy.

According to the National Statistical Portal (KOSIS) of Statistics Korea on the 1st, the manufacturing production capacity index in April was 105.0 (2015=100), down 0.4% from the previous month. This is the lowest level since August 2020 (104.6), when the second wave of COVID-19 was severe.

The production capacity index recorded 105.1 in January and February this year, rose slightly to 105.4 in March, but fell again in April. It is analyzed that companies reduced production due to external risks such as rising raw material prices and global supply chain disruptions.

By industry, production capacity declined mainly in electronic components (-2.1%), food products (-2.1%), and metal processing (-1.6%). The manufacturing operating rate index (103.5) also fell 1.6% compared to the previous month.

The average operating rate of manufacturing was 77.0%, down 1.3 percentage points from the previous month. This is the lowest level in five months since November last year (75.1%). Manufacturing inventory increased by 0.2%, shipments decreased by 2.3%, and the inventory ratio rose 2.8 percentage points from the previous month to 117.2%.

Concerns are emerging that a contraction in manufacturing could also impact the employment market. Manufacturing jobs account for about 21% of domestic wage worker jobs, the largest share.

Meanwhile, external uncertainties are increasing, and the outlook for the economy is not bright. The coincident index, which indicates the current economy, was 102.1, down 0.3 points from the previous month. The leading index, which predicts future economic conditions, also fell 0.3 points to 99.3, continuing a decline for 10 consecutive months.