May Production, Consumption, and Investment All Decline for the First Time in 10 Months (Update)

Statistics Korea, Industrial Activity Trends

The three major indicators showing industrial activity?industrial production, retail sales, and investment?all declined simultaneously last month. It is the first time in 10 months since July of last year that all three indicators recorded negative growth.

According to the 'May 2024 Industrial Activity Trends' released by Statistics Korea on the 28th, total industrial production last month decreased by 0.7% compared to the previous month. The growth trend that had continued for four consecutive months since November last year was interrupted in March (-2.3%), turned positive in April (1.2%), but shifted back to negative within a month.

Looking at industrial production by sector, production increased in public administration, but decreased by 0.7% month-on-month in mining and manufacturing industries (-1.2%), including manufacturing, and services (-0.5%).

Within mining and manufacturing, production increased in semiconductors (1.8%) but decreased in machinery and equipment (-4.4%) and automobiles (-3.1%). In the service sector, production rose in wholesale and retail trade (1.9%) but declined in finance and insurance (-2.5%) and information and communication (-1.6%).

Manufacturing inventory decreased by 0.1% compared to the previous month, and the average operating rate fell by 0.7 percentage points to 72.8%.

The consumption indicator continued its negative streak following the previous month. Retail sales, which reflect consumption trends, decreased by 0.2% month-on-month. Sales increased in non-durable goods such as food and beverages (0.7%) and durable goods such as passenger cars (0.1%), but decreased in semi-durable goods such as clothing (-2.9%).

Facility investment declined by 4.1% month-on-month as investments decreased in transportation equipment such as automobiles (-12.3%) and machinery such as precision instruments (-1.0%). Construction performance also fell by 4.6% month-on-month due to decreases in building (-5.7%) and civil engineering (-1.1%) projects.

Domestic machinery orders increased in the public sector (44.2%) but decreased in the private sector (-4.1%). Construction orders (current) declined in both civil engineering sectors such as railroads and tracks (-45.0%) and building sectors such as offices and stores (-28.9%).

The coincident index of cyclical fluctuations, which reflects the current economy, stood at 98.8, down 0.6 points from the previous month. The leading index of cyclical fluctuations, which forecasts future economic conditions, was 100.5, down 0.1 points from the previous month.