Services Sector Seeing Signs of Recovery
By Yoon Ja-young
Staff Reporter
The services sector has seen a turn for the better for the first time since the onslaught of the global financial crisis last October, adding to expectations of an economic recovery and job creation.
According to the National Statistical Office (NSO), the services production index recorded 109.4 in February, edging up 0.1 percent compared with a year ago. This is the first year-on-year growth seen since October when the global financial crisis jolted the economy. Services output dropped 1.5 percent in November, 1.2 percent in December, and 1.1 percent in January.
The turnaround is a positive sign as the sector is responsible for nearly 70 percent of jobs in the country. Among the 22.74 million people who had jobs as of February, 15.76 million, or 69.3 percent, worked in the services industry.
Economists have been advising the government to boost the economy through the services sector, which would help in economic growth and job creation.
Korea's manufacturing sector, the main pillar of the economy so far, has been losing competitiveness. One billion won in sales from the manufacturing industry, for example, creates only 4.9 jobs, while the average job creation for all industries stood at 12.2. Some services sectors create over three times more jobs than manufacturing. The medical industry creates jobs for 16.3 people for every one billion won in sales.
More production in the sector means that job market conditions are likely to turn for the better, and people will have room for more consumption.
There are other signs that the economy may be recovering. Sales of goods recorded 17.13 trillion won in February, up 5 percent from the previous month and the biggest growth since February 1998. The seasonally adjusted index fell 0.5 percent in November, 0.2 percent in December, and 2.1 percent in January.
Consumption of durable goods such as cars and home electronic goods also grew 6.4 percent, adding to positive signs. Consumption of these goods is usually sluggish when the economy is in bad shape.
The sector made up 46 percent of the gross domestic product (GDP) last year.