Korea: Industrial production contracts for the first time in five months in September
October 31, 2016
In September, industrial production fell 2.0% from the same month last year. The result marked the first decrease since April and contrasted the 2.2% increase observed in August and the 1.0% rise the markets had expected. Due to the strong annual decline the trend now points downwards. Annual average growth in industrial production dropped from 0.8% in August to 0.4% in September.
Looking at the details, manufacturing output decreased 2.2% annually in September, reflecting a slump in automobile and mobile devices production. A drop in car sales—due to the end of the government’s tax excise on passenger cars—and strikes in some plants prompted car manufacturers to slow production, while the drop in mobile devices’ output reflected the worldwide recall production halt of Samsung’s Galaxy Note 7. Output in the service sector rose 2.8% in September (August: +4.8% year-on-year). Meanwhile, construction activity decelerated substantially over the previous month (September: +9.4% yoy; August: +23.5% yoy).
A month-on-month comparison showed that Korea’s factory output rebounded in September. It increased a seasonally-adjusted 0.3% over the previous month, which contrasted the 2.4% decrease in August.
Author: Ricardo Aceves, Senior Economist