Korean Economy News
Korea’s industrial activity and domestic demand turn negative in October

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South Korea’s industrial activity and domestic demand drooped in October after a brief rebound in the previous month.

The seasonally adjusted mining and manufacturing output in October fell 1.2 percent from a month ago in a sharp retreat from the 5.5 percent rise in September, Statistics Korea reported Monday. Against a year ago, it was down 2.2 percent.

Factory operation averaged 73.7 percent in October, down 0.2 percentage point versus the previous month. Inventory levels fell 0.9 percent on month and 0.1 percent on year.

Export mainstays that had driven the previous uptick plunged in the recent month. Production of semiconductors dipped 9.5 percent and electronic parts 2.6 percent, failing to offset the 3.5 percent rise in chemical products.

The benchmark Kospi fell 1.60 percent to close Monday at 2,591.34. The Korean won fell 2.00, or 0.18 percent, against the U.S. dollar to 1,107.00.

Service output gained 1.2 percent on eased social distancing, accelerating from the 0.3 percent rise in the previous month. Accommodations and restaurants jumped 13.3 percent and information communications 2.6 percent.

Retail sales were off 0.9 percent in October, turning negative in three months. Semi-durable goods like clothes rose 7.2 percent and durables like cars climbed 2.0 percent, while non-durables like food fell 5.7 percent.

Capital investment edged down 3.3 percent in the latest month. Spending in machinery rose 1.9 percent, while investment in transportation equipment including aircraft plunged 14.9 percent.

The coincident index, reflecting current economic activities, rose 0.5 point from a month earlier. The leading indicator, a gauge of where the economy is headed, also climbed 0.4 point. This marks the fifth consecutive month of gains in both indicators, the longest run of double wins since 1998-1999 when both indexes headed upward for 12 straight months.

“Industrial output is being heavily influenced by the spread of Covid-19,” said Ahn Hyung-joon of Statistics Korea. “Services rebounded but retail sales fell as September’s toughened social distancing measures were relaxed in October.”

November readings are expected to be even grimmer as Korea is struggling to contain a third wave of infections. Last week, the country reported its biggest one-day surge of new cases since early March, topping 500 cases for three straight days. This has prompted authorities to tighten social distancing rules, shutting down nightclubs, allowing only takeout in coffee shops and limiting in-door dining hours to 9 p.m.

By Kim Hyo-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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