Manufacturing Domestic Demand Declines for 4 Consecutive Quarters...Longest Record in History

Statistics Korea, Domestic Supply Trends in Manufacturing for Q2

Domestic supply of manufacturing products in the second quarter decreased by more than 2% compared to a year ago, continuing a decline for the first year. This downward trend is longer than the period when consumption shrank due to the COVID-19 pandemic.

According to the 'Manufacturing Domestic Supply Trends' released by Statistics Korea on the 8th, the manufacturing domestic supply index (provisional) for the second quarter of this year was 106.8 (2020=100), down 2.2% from a year earlier.

This marks four consecutive quarters of decline since the third quarter of last year (-2.9%), the fourth quarter (-2.8%), and the first quarter of this year (-2.4%), the first time since the related statistics began in 2010. In 2020, when COVID-19 began to spread, there was a consecutive decline for three quarters (Q2 to Q4).

The manufacturing domestic supply index is an indicator that indexes the real supply value of manufacturing products produced domestically and shipped domestically, or produced abroad and distributed domestically. The decrease in domestic supply can be seen as a reflection of sluggish domestic demand.

However, the recent decline in manufacturing domestic supply is showing signs of slowing. By product category, among final goods, consumer goods decreased by 2.2%. Consumer goods have been declining for five consecutive quarters since the second quarter of last year.

Supply of leisure vehicles (RV passenger cars), large passenger cars, refrigerators, and women's suits decreased. On the other hand, capital goods increased by 3.8% due to increased supply of gas and chemical carriers, machinery, and equipment repairs.

Although consumer goods supply decreased, capital goods increased, resulting in a 0.3% increase in domestic supply of final goods. Intermediate goods decreased by 3.9% due to reduced supply of system semiconductors, flash memory, and internal combustion engines for automobiles.

By industry, supply decreased in electronics and telecommunications (-10.4%), automobiles (-5.7%), and chemical products (-3.7%). Conversely, other transportation equipment increased by 23.5% due to increased supply of aircraft parts and ships.

By source of manufacturing supply, domestic products decreased by 1.1%, and imports decreased by 5.2%, with the decline in imported supply being larger.

The share of imported products in nominal manufacturing domestic supply was 27.7%, unchanged from the same quarter last year.