May Production, Consumption, and Investment All Increase for the First Time in 3 Months (Update)

Statistics Korea, May Industrial Activity Trends

In May, production, consumption, and investment all increased simultaneously for the first time in three months, signaling a positive turn in the economy.

According to the May Industrial Activity Trends released by Statistics Korea on the 30th, overall industrial production rose by 1.3% month-on-month, increasing in manufacturing, public administration, and construction sectors despite a decline in the service sector.

Manufacturing production decreased in areas such as telecommunications and broadcasting equipment (-16.9%), but increased in automobiles (8.7%) and semiconductors (4.4%), resulting in a 3.2% month-on-month rise. However, compared to the same month last year, production fell by 7.3% due to declines in semiconductors (-16.7%) and chemical products (-16.6%), despite growth in automobiles (18.5%). Statistics Korea analyzed this as a sluggish trend caused by the IT sector downturn and delayed effects of China's reopening.

Semiconductor inventory increased by 2.7% month-on-month and 84.7% year-on-year. Kim Bo-kyung, Economic Trend Statistics Officer at Statistics Korea, stated, "While semiconductor production itself has increased for three consecutive months, it still shows a negative figure compared to the same month last year. The effects of production cuts do not appear immediately, so we expect to see results if we observe for a while longer."

Service sector production rose in professional, scientific, and technical services (3.2%), but declined in finance and insurance (-4.1%) and accommodation and food services (-4.5%), resulting in a 0.1% month-on-month decrease. Year-on-year, production decreased in information and communications (-5.4%) but increased in finance and insurance (9.8%) and transportation and warehousing (7.5%), leading to a 2% overall increase.

Retail sales increased by 0.4% month-on-month, with growth across durable goods such as home appliances (0.5%), semi-durable goods like shoes and bags (0.6%), and non-durable goods including food and beverages (0.2%). Statistics Korea attributed the sales increase to an earlier-than-usual heatwave and a rise in apartment move-in volumes compared to the average year.

Facility investment rose by 3.5% month-on-month, driven by increases in machinery such as general industrial machines (2.6%) and transportation equipment including aircraft (6.2%). Construction performance increased by 0.5% compared to the previous month, with civil engineering projects declining slightly (-0.1%) but building construction rising (0.7%).

The Coincident Composite Index, which reflects the current economic situation, rose by 0.1 points month-on-month, marking four consecutive months of growth. Meanwhile, the Leading Composite Index, which forecasts future economic conditions, remained flat compared to the previous month.