Output Growth Slows in May
By Lee Hyo-sik
Staff Reporter
The nation's industrial output growth slowed last month due to lackluster growth in plant investment, and weakening hopes for a stronger economy in the second half.
According to the National Statistical Office (NSO) on Thursday, output grew 6.6 percent in May from a year earlier, lower than a 6.7 percent gain the previous month. The market consensus was 6.4 percent.
However, the seasonally-adjusted output growth fell to 0.9 percent in May month-on-month from 3.1 percent growth in April.
Choi In-keun, head of the NSO's economic statistics bureau, said, ``Consumption is turning better modestly, but plant investment and the construction sector are not recovering as fast as we had hoped.''
He said it is hard to assess the exact state of the economy for now, citing uncertainties such as the strong won and high international oil prices. He also said sluggish job growth is negatively affecting overall economic growth.
Frederic Neumann, chief Korea economist at HSBC, said industrial output was relatively robust in May, despite a slight softening in export growth, suggesting that domestic demand may be strengthening more than expected.
``Relatively robust industrial output growth may strengthen the case for a tightening of monetary conditions in the eyes of the Bank of Korea, which recently expressed concern over rapid loan growth,'' he said.
``However, there is little reason for a rate hike at this juncture because, despite a reinvigorated industrial sector, sluggish private consumption continues to represent a risk for the expected rebound in aggregate demand.''
The index of leading indicators, the key gauge of future economic trends, came in at 5.1 percent, unchanged from the previous month, while the coincidence index, which reflects current economic conditions, dropped 0.2 points to 100.4.
The sluggish construction industry amid weaker demand for new homes is also keeping the economy from posting a stronger recovery. Domestic construction orders rose 5.2 percent, down from a 48.9 percent increase a month ago.
Semiconductor production increased 17.7 percent year-on-year in May, compared with a 14.2 percent the previous month, while auto production grew 6.8 percent from a year earlier.
Retail sales rose 6.3 percent, up from 4.9 percent, and seasonally adjusted sales also increased 2 percent, compared with a 1.7 percent drop a month ago.
Corporate investment in plants and equipment jumped 10.2 percent last month year-on-year, down from 15.7 percent.