July Marks Third Month of Decline in South Korea's Industrial Production
By Business Korea, August 30, 2024
In July, industrial production in South Korea decreased by 0.4%, marking the third consecutive month of decline, according to the "July Industrial Activity Trends" report released by Statistics Korea on August 30. This three-month decline is the longest in 21 months, reflecting ongoing challenges in the industrial sector.
The all-industry production index for July stood at 112.7, down 0.4% from the previous month. Public administration production increased by 6.0%, and the service industry saw a 0.7% rise. However, manufacturing contracted significantly, with mining and manufacturing production falling by 3.6%, the largest decline in 19 months. Semiconductor production dropped by 8.0%, and automobile production decreased by 14.4%, the largest decline in 50 months since May 2020. In contrast, production in communication and broadcasting equipment surged by 48.8%.
Retail sales also fell by 1.9% in July, indicating sluggish domestic demand. Sales of durable goods decreased by 2.3%, semi-durable goods by 2.1%, and non-durable goods by 1.6%. Despite these declines, facility investment increased by 10.1%, marking the second consecutive month of double-digit growth, driven in part by investments in the transportation sector, including the introduction of new aircraft.
The coincident index, which reflects the current economic situation, fell by 0.1 points to 98.7, while the leading index, which predicts future economic conditions remained steady at 100.6. The government expects construction projects like the third new town and the Sejong-Pocheon Expressway to positively impact the construction economy in the second half of the year.
Gong Mi-sook, Director of Economic Trend Statistics at Statistics Korea, commented on the trends, stating, "Although production has decreased for three consecutive months, it shows a 'positive' trend compared to the same month last year." She added, "The industrial sector is considered to be in a good condition."
The government has diagnosed varying recovery speeds across domestic sectors. While the IT industry shows signs of improvement and a soft landing for the global economy is anticipated, uncertainties in the supply chain, major national elections, and difficulties in small business management remain burdensome. Upward factors include the stabilization of prices, autumn festivals, sales periods, and the full-scale implementation of delayed facility investments. Conversely, household debt, real estate project financing risks, and sluggish construction orders are seen as downward factors.
As the country navigates these economic challenges, the government remains cautiously optimistic about the potential for recovery in certain sectors, while acknowledging the complexities and uncertainties that lie ahead.
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