May Industrial Production and Facility Investment 'Unstable Rebound'... Consumption Declines for Third Consecutive Month (Update)

[Asia Economy Sejong=Reporter Kim Hyewon] In May, domestic industrial production and facility investment rebounded, and indicators predicting future economic conditions also turned upward. However, considering that consumption has been declining for three consecutive months and that just a month ago production, consumption, and investment all showed a 'triple decline,' it is assessed that the economic recovery remains unstable.

According to the May industrial activity trends announced by Statistics Korea on the 30th, the overall industrial production index (seasonally adjusted, excluding agriculture, forestry, and fisheries) last month was 117.1 (2015=100), an increase of 0.8% from the previous month. In April, it had decreased by 0.9%.

The service sector increased by 1.1%, leading the overall industrial production growth. Manufacturing rose by 0.1%, and construction increased by 5.9%. Public administration decreased by 2.7%.

Facility investment, which had declined for three consecutive months since February, turned to an increase in May, rising by as much as 13%. Construction investment also increased by 5.9%.

Oh Woonseon, Economic Trend Statistics Officer at Statistics Korea, explained, "Although there was investment demand, semiconductor equipment production was disrupted due to parts procurement issues, but as those problems have been resolved, investment has increased."

Consumption decreased. The retail sales index (seasonally adjusted), which reflects consumption trends, was 119.6 (2015=100) in May, down 0.1% from the previous month. This marks a decline for three consecutive months following -0.7% in March and -0.2% in April. This is the first time in over two years since January to March 2020 that consumption has fallen for three consecutive months.

The coincident index, which indicates the current economic situation, rose by 0.1 point to 102.2, breaking the two-month consecutive decline in March and April. The leading index, which predicts future economic conditions, increased by 0.1 point to 99.4, marking its first rise in 11 months.

Officer Oh said, "The upward turn in the coincident and leading indices is positive, but with the prolonged Ukraine crisis and concerns over worsening global financial conditions, we need to monitor the situation further."