Korea: Growth in industrial production moderates in March
April 28, 2017
In March, industrial production rose 3.0% from the same month last year. The result followed a 6.7% expansion in February—the highest reading in four years—and came in below market expectations of a 3.7% rise. Despite the deceleration, the trend continues to point upwards. Annual average growth in industrial production rose from 1.7% in February to 2.0% in March, the highest reading since January 2013 and a boon to policymakers seeking to shore up the Korean economy.
The deceleration was largely driven by a smaller increase in the all-important manufacturing output sub-index. After soaring by 6.9% in February, growth in manufacturing came in at a smaller 3.2% expansion in March. The manufacturing capacity utilization rate was down 1.4% in annual terms in March, a deterioration over the 3.1% expansion observed in February. On a better note, growth in the services sector picked up some pace as it expanded 2.8% in March (February: +2.5% year-on-year).
A month-on-month comparison paints a brighter picture of the industrial sector. Korea’s factory output growth, when adjusted for seasonality, rebounded from a 3.3% plunge in February—the worst reading since December 2008—to a 1.0% expansion in March. The subdued performance in February had been expected due to temporary factors related to the launch of Samsung’s new line of high-tech phones. This was confirmed with March’s rebound, which saw semiconductor production of electronic parts and automobiles soar compared to the previous month.
Author: David Ampudia, Economist