Statistics Korea, February Industrial Activity Trends
'Production, Consumption, Investment' Triple Increase in 14 Months
Last month, production, consumption, and investment all increased simultaneously for the first time in 14 months. However, due to the semiconductor slump, manufacturing production continued to decline for the fifth consecutive month. Domestic consumption improved as the COVID-19 pandemic subsided, leading to better service sector production, but manufacturing production remained sluggish due to worsening exports.
On the 31st, Statistics Korea released the February industrial activity trends containing these details.
Kim Bo-kyung, Director of Economic Trend Statistics at Statistics Korea, stated, "Favorable weather and the easing of the COVID-19 pandemic increased outdoor activities, boosting face-to-face sectors such as transportation, warehousing, accommodation, food services, arts, sports, and leisure. This led to increases in service industry, public administration, and construction production, resulting in a 0.3% rise in total industrial production. Retail sales increased sharply by 5.4% due to the base effect of three consecutive months of decline, large-scale discount events, and the resumption of electric vehicle subsidies, which boosted sales of food and beverages and passenger cars. Facility investment also rose slightly by 0.2% after two consecutive months of decline," he explained.
On the 28th, Myeongdong Shopping Street in Jung-gu, Seoul, was bustling with foreign tourists and citizens. Photo by Dongju Yoon doso7@
Total industrial production increased by 0.3% month-on-month as production rose in the service sector (0.7%) despite a decline in mining and manufacturing (-3.2%). Manufacturing production decreased by 3.1% month-on-month, with increases in primary metals (5.1%) and chemical products (3.3%), but declines in semiconductors (-17.1%) and automobiles (-4.8%). The decline continued for the longest period on record, five consecutive months. Notably, the semiconductor production decline rate was the highest since December 2008 (-18.1%).
Service sector production increased by 0.7% month-on-month, rising in transportation and warehousing (5.4%) and accommodation and food services (8.0%), despite decreases in information and communications (-4.0%). Retail sales rose by 5.3% month-on-month, with increases in nondurable goods such as food and beverages (6.4%), durable goods such as passenger cars (4.6%), and semi-durable goods such as clothing (3.5%). Facility investment increased by 0.2% month-on-month, as investment rose in machinery such as special industrial machinery (1.3%) despite a decline in transportation equipment such as automobiles (-3.0%).
The coincident composite index, which reflects the current economic trend, rose by 0.4 points month-on-month, escaping a five-month consecutive decline. This was due to increases in construction performance and retail sales indices, despite decreases in the mining and manufacturing production index and domestic export-import index.
On the other hand, the leading composite index, which predicts future economic conditions, fell by 0.3 points month-on-month. This was because increases in construction orders and the KOSPI were offset by decreases in the short- and long-term interest rate spread and the machinery domestic export-import index.
Director Kim said, "The leading index shows conditions 5 to 6 months ahead, and it has recently been declining. We need to watch whether the decline stops and positive sentiment indicators appear, as consumer sentiment and business sentiment indices to be announced in March are expected to rise, reducing the rate of decline."
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