Industrial Output Falls for First Time in 13 Months
By Lee Hyo-sik
Staff Reporter
Industrial output in October fell for the first time in 13 months, as more businesses cut production to cope with sluggish domestic demand and falling exports in the wake of the ongoing global credit crunch and economic downturn.
According to the National Statistical Office (NSO) Friday, industrial production contracted 2.4 percent last month from a year earlier, down from a 6.2 percent increase the previous month. It marks the first drop since September last year, when output declined 3.1 percent year-on-year.
Seasonally adjusted production also fell 2.3 percent from a month earlier, compared with a 0.6 percent month-on-month drop in September.
Additionally, a key index measuring the economic outlook dropped for the 11th consecutive month since December last year, indicating businesses and households are becoming more pessimistic about the business outlook. The coincidence index, which reflects current economic conditions, also declined to 98.4 from 99.2, falling for the ninth consecutive month, the statistical office said.
``Besides continued sluggish domestic demand, production has slowed as exports have begun heading downhill amid a global economic slowdown. The nation's outbound shipments will likely expand at a slower pace for the foreseeable future,'' an NSO official said. Exports increased 0.7 percent in October from a year ago, the slowest pace since February 2002, when it shrank 1.9 percent.
The production of semiconductors and digital equipment decreased 13.6 percent and 5.1 percent, respectively. Despite falling output, sluggish sales at home and abroad pushed up manufacturers' inventories.
Inventories soared 17.6 percent from a year earlier, the largest growth since November 1996, when they rose 17.8 percent. Factories were operating at an average of 77 percent of full capacity, hitting a two-year low.
Services-sector output grew 1 percent in October from a year ago, down from a 3 percent gain the previous month. The finance and insurance sector saw output increased by 3.8 percent. The education services sector and real estate and leasing businesses fell by 8.9 percent and 8.6 percent, respectively.
Retail sales dropped 3.7 percent, despite falling consumer prices, as more consumers tightened their purse strings on the tight job market and worsening economic conditions. Seasonally adjusted sales also decreased 1.4 percent month-on-month.
Corporate facility spending on machinery and telecommunications fell 7.7 percent, compared with a 7.1 percent jump the previous month. Orders received by construction companies fell 24 percent from a year earlier on the continued housing slump.