Korea: Industrial production falls for second consecutive month in October
November 30, 2016
In October, industrial production in Korea fell 1.6% from the same month last year. The result followed the revised 1.7% contraction observed in September (previously reported: -2.0% year-on-year) and was virtually in line with the 1.7% decrease the markets had expected. Due to the annual decline, the trend is pointing downwards. Annual average growth in industrial production dropped from 0.4% in September to 0.1% in October.
The all-important manufacturing output sub-index was the key driver behind October’s contraction. Manufacturing decreased 1.6% annually in October, which reflect a continued 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 output of mobile devices reflected the worldwide recall production halt of Samsung’s Galaxy Note 7. Meanwhile, output in the service sector rose 2.5% in October (September: +2.6% year-on-year), while construction activity accelerated substantially over the previous month (October: +17.3% yoy; September: +9.5% yoy).
A month-on-month comparison is also discouraging. Korea’s factory output growth, when adjusted for seasonality, was virtually flat in October, increasing just 0.1% over the previous month. The result followed a 0.4% increase in September.
Author: Ricardo Aceves, Senior Economist