Sharpest Decline in Consumption This Year
Korea's industrial production fell 1.3 percent in September from the previous month due to sluggish mining and other industries. It was the sharpest drop in five years and six months.
Facility investment rose for the first time in seven months, but consumption recorded the sharpest decline this year.
The current economic situation seems to be deteriorating as the composite index of coincident indicators, which shows the current economic situation, fell for the sixth consecutive month in September.
According to the industrial output data for September released by Statistics Korea on Oct. 31, the production index of all industries fell 1.3 percent from the previous month to 106.6.
The all-industry production index has fluctuated since this year. It fell in February and March month on month, but rose in April and May. It fell again in June, but rose for two consecutive months in July and August.
Although the service industry showed a similar level of output to the previous month, production of the mining industry decreased.
Mining industry output fell 2.5 percent, led by declines in automobile and electronic component production.
Manufacturing output dropped 2.1 percent, the biggest decline in 19 months since February last year (-3.0 percent).
Manufacturing inventories decreased by 1.2% compared to the previous month as reduction in primary metals, telecommunication and broadcasting equipment offset increases in automobiles and chemicals.
The retail sales index, which shows consumption trends, recorded 108.8 in September, down 2.2 percent from the previous month. It recorded the biggest drop in nine months since it fell 2.6 percent in December last year.
Facility investment, which had been negative for the sixth consecutive month from March to August, rose 2.9 percent in September.
The composite index of coincident indicators, an indicator of the current economic situation, fell 0.3 points from the previous month.
The leading index, which is an indicator of the future economic situation, also fell 0.2 points from the previous month.
The coincident index has been negative for six months while the leading index has been negative for four months.
“Although facility investment rose for the first time in seven months, most of the key indicators showed a decrease or continued their downward trends,” said Eo Un-sun, head of the industrial trend division at Statistics Korea.
“It is hard to deny that the current economic situation is bad, given the decline of the coincident index for the sixth consecutive month,” Eo said. But he said Statistics Korea still needs time to acknowledge that the Korean economy has reached an inflection point in the current business cycle.