Decline in Industrial Output Continues for Second Month
Pharmaceutical Production Drop Drives Largest Decrease Since January
Consumption Remains Flat for Third Straight Month
Facility Investment and Construction Performance Also Weaken
Economic Indicators Signal Downward Trend
Last month, industrial production continued its negative trend for the second consecutive month, primarily due to a decline in pharmaceutical production. Consumption remained flat, failing to rebound for the third straight month, and indicators reflecting both current and future economic conditions turned downward.
According to the "May Industrial Activity Trends" report released by Statistics Korea on the 30th, total industrial production in May decreased by 1.1% compared to the previous month. This marks the second consecutive month of decline, following a 0.8% drop in April. It is also the largest decrease in four months since January, when production fell by 1.6%.
Production increased in public administration, but declined in mining and manufacturing, construction, and services. Within mining and manufacturing, production rose in primary metals (up 1.5%), but fell in pharmaceuticals (down 10.4%) and fabricated metal products (down 6.9%), resulting in an overall 2.9% month-on-month decrease.
Manufacturing inventories increased by 0.4% compared to the previous month, while the average operating rate fell by 2.1 percentage points to 71.7%.
Retail sales, which reflect consumption trends, remained unchanged from the previous month. Sales increased for durable goods such as telecommunications equipment and computers (up 1.2%), as well as semi-durable goods like clothing (up 0.7%), but declined for non-durable goods such as cosmetics (down 0.7%).
After declining for two consecutive months in March and April, retail sales remained stagnant in May, even as the first supplementary budget was executed, resulting in a third straight month without a rebound.
Choi Changyoon, Director of Service Industry Trends at Statistics Korea, explained, "Most of the first supplementary budget was allocated for disaster recovery or investment purposes, so it was not reflected in public administration. There is a possibility that it will be reflected in other areas outside of public administration in the future."
By retail type, sales increased by 6.5% year-on-year at passenger car and fuel retailers, but decreased at duty-free shops (down 17.7%) and supermarkets and general stores (down 2.9%).
Facility investment shrank by 4.7% compared to the previous month, marking the third consecutive monthly decline following a 0.5% drop in March. Investment increased slightly in transportation equipment such as other vehicles (up 0.1%), but decreased in machinery, including semiconductor manufacturing equipment (down 6.9%).
Construction performance, as measured by completed construction, decreased by 3.9% from the previous month, with both building construction (down 4.6%) and civil engineering (down 2.0%) posting declines.
Construction orders (current prices) increased by 20.7% year-on-year in building construction, including housing, but fell by 62.4% in civil engineering projects such as power generation and communications, resulting in an overall 5.5% year-on-year decrease.
The coincident index of cyclical indicators, which reflects the current economic situation, fell by 0.4 points from the previous month to 98.5. The leading index of cyclical indicators, which signals future economic trends, declined by 0.1 points to 100.9.
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