Korea: Growth in industrial production jumps in February
March 31, 2017
In February, industrial production rose 6.6% from the same month last year, the best result in four years. The result followed the 1.4% revised expansion observed in January (previously reported: +1.7% year-on-year) and nearly met market expectations of a 6.7% expansion. Due to the annual increase, the trend continues to point upwards. Annual average growth in industrial production increased from 1.3% in January to 1.7% in February.
The crucial manufacturing output sub-index was behind February’s robust reading. Growth in manufacturing accelerated from a 2.0% increase to a 7.0% expansion year-on-year in February, despite manufacturing capacity utilization rate being down 2.8% in annual terms. Meanwhile, growth in the service sector was broadly stable, expanding 2.5% in February (January: +2.7% yoy).
A month-on-month comparison paints a much bleaker picture of the industrial sector. Korea’s factory output growth, when adjusted for seasonality, plunged 3.4% from the previous month in February. This erased gains seen in the 2.9% increase recorded in January and marked the lowest reading since December 2008. The subdued performance, particularly in semiconductor production, is expected to be temporary, since Samsung launched its latest phone in late March, which will boost manufacturing output in upcoming months.
Author: David Ampudia, Economist