July Production Down 0.4%... Negative for 3 Consecutive Months (Update)

Statistics Korea Industrial Activity Trends
Automobile Production Down 14.4% · Semiconductor Down 8.0%

Production in July declined for the third consecutive month. Retail sales also turned negative, decreasing by 1.9%. On the other hand, facility investment increased by 10.1%, marking two consecutive months of growth.

[Image source=Yonhap News]

According to the 'July Industrial Activity Trends' released by the Statistics Korea on the 30th, total industrial production last month fell by 0.4% compared to the previous month. This marks a decline for three consecutive months following May (-0.8%). By sector, production increased in public administration (6.0%) and services (0.7%), but decreased in mining and manufacturing (-3.6%) and construction (-1.7%), pulling down the overall industrial production index.

Manufacturing, which accounts for the majority of mining and manufacturing production, decreased by 3.8%, with semiconductor (-8.0%) and automobile (-14.4%) production sharply declining. In particular, automobile production saw its largest drop in 50 months since May 2020 (-24%).

Gong Mi-sook, Director of Economic Trend Statistics at Statistics Korea, explained, "In the case of automobiles, there were some strikes at parts suppliers and special circumstances such as line maintenance work." She added, "Although production has decreased for three consecutive months, the industrial sector is recovering, and when compared to the same month last year, it is moving into positive territory, so we do not consider this a negative situation."

Retail sales, which indicate goods consumption trends, decreased by 1.9% from the previous month due to reduced sales in vehicle fuel and passenger cars. Facility investment increased by 10.1% from the previous month, driven by increased investment in transportation equipment, marking two consecutive months of growth.

Construction output decreased by 1.7% from the previous month as civil engineering construction performance declined. The coincident index of economic indicators, which reflects the current economy, fell by 0.6 points to 98.4 compared to the previous month, while the leading index, which forecasts future economic conditions, remained steady at 100.6.