The Korean economy continues to recover thanks to steady growth in production and improvement in domestic demand. Industrial production maintained its overall upward trend, rising by 33.9%, while service production increased from the previous month's 3.5% to 5.3%. Furthermore, consumption-related economic indicators continued improving in private consumption, while the consumer goods sales index marked a 12.1% growth rate, increasing from the previous month's 9.9% due to the base effect and an increase in the sales of durable goods.
Investment-related indicators showed a stronger improvement trend, with the equipment investment index showing a 21.0% growth rate, a huge jump from the previous month's 11.1%. In addition, the value of construction completed recorded 13.1%, a sharp rise from the previous month's 3.6% due to an improvement in public construction performance. Exports slowed down due to seasonal factors in January, such as the fall of some export items like ships.
The labor market recorded a drop of 16,000 in the number of hired workers, while the economic activity participation rate dropped by 0.7% in what it is considered as a gradual improvement considering the expiration of projects in the public sector. CPI marked a 3.1% growth rate, an increase from the previous month's 2.8%, due to a price rise in agricultural and petroleum products.
Meanwhile, domestic financial markets showed increased volatility, most likely in part because of the possible changes in government policy regarding the stock market. Treasury bond yields recorded 4.27 as of late December, a decrease of 14 bp from the previous month. The KOSPI index fell, closing at 1602.43, with the contraction in investment sentiment caused by China's austerity policy and the announcement of a financial regulation reform bill by the Obama administration. The KRW/USD exchange rate recorded 1156.5, down by 11.1 from the previous month, with the weakening dollar caused by FRB's announcement that it would maintain the low interest rate.