Production and Investment Continue Upward Trend in July
Retail Sales See Biggest Gain in 29 Months
Service and Manufacturing Output Rise Despite Weakness in Finance
Construction Performance Declines, but Orders for Housing Surge
Econom
In July, total industrial production increased by 0.3% compared to the previous month, marking a positive trend for the second consecutive month. With the distribution of livelihood recovery consumer coupons, retail sales rose by 2.5%, the largest increase in 29 months. Consumption, which had been suppressed by high inflation and high interest rates, appears to be reviving due to the coupon distribution. Investment also increased by 7.9% from the previous month, resulting in a 'triple increase' in production, consumption, and investment for the first time in five months since February this year.
According to the 'Industrial Activity Trends for July 2025' released by Statistics Korea on the 29th, total industrial production last month increased by 0.3% compared to the previous month. Total industrial production showed a positive trend for two consecutive months, following a 1.5% increase in June.
Production increased in both the mining and manufacturing sector (0.3%) and the service sector (0.2%). In mining and manufacturing, although automobile production decreased by 7.3%, production increased for electronic components (20.9%)-mainly OLEDs and printed circuit boards-and machinery equipment (6.5%). Inventories in manufacturing decreased by 1.7% compared to the previous month.
In the service sector, production declined in finance and insurance (-6.0%), but expanded in wholesale and retail (3.3%) and information and communications (3.1%). Wholesale and retail production increased, particularly in the wholesale of household goods, food and beverages, and tobacco.
Retail sales, which reflect consumption, increased by 2.5% compared to the previous month. This marked a positive trend for the second consecutive month, following a 0.7% increase in June. Retail sales saw the largest increase in 29 months since a 6.1% rise in February 2023. Sales of durable goods, such as telecommunications devices, computers, and home appliances, rose by 5.4%, while sales of nondurable goods, including food and beverages, increased by 1.1%. Sales of semi-durable goods, such as clothing, also grew by 2.7%.
Lee Dowon, Director of Economic Trend Statistics, explained, "Retail sales increased not only from the previous month but also year-on-year, due to the distribution of livelihood recovery consumer coupons included in the second supplementary budget and the energy-efficient home appliance rebate program." Compared to the same month last year, retail sales rose by 2.4%, the largest increase in 42 months since January 2022 (5.3%).
Facility investment also increased by 7.9% compared to the previous month. After declining for four consecutive months, including a 4.3% decrease in June, it rebounded into positive territory. This is the largest increase in five months since a 21.3% rise in February. As aircraft imports grew, investment in transportation equipment surged by 18.1%, and investment in machinery, such as general industrial machinery, increased by 3.7%. However, compared to the same month last year, investment in transportation equipment, including other transportation equipment, fell by 16.5%, resulting in an overall 5.4% decrease. Overall, facility investment remains weak.
In construction, completed work increased by 10.1% in civil engineering but decreased by 4.8% in building construction, resulting in a 1.0% decline compared to the previous month. Both residential and non-residential construction performance declined. Compared to the same month last year, construction performance fell by 14.2%, with decreases in both building construction (-16.4%) and civil engineering (-6.4%). Construction orders decreased by 14.6% in civil engineering, such as machinery installations, but increased by 45.7% in building construction, including housing, resulting in a 22.4% year-on-year increase.
The cyclical component of the coincident composite index, which reflects the current economic situation, fell by 0.1 points from the previous month, as the domestic shipment index and import value decreased despite increases in retail sales and construction performance. The cyclical component of the leading composite index, which predicts future economic trends, rose by 0.5 points from the previous month, as factors such as the KOSPI and the spread between short- and long-term interest rates increased.
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