By Kang Seung-woo
Korea’s industrial output increased for the 14th straight month in August, as the economic recovery is getting back on track, a government report said Thursday.
But the leading economic composite index declined for eight consecutive months.
Statistics Korea announced that production in the mining and manufacturing sectors grew 17.1 percent last month from a year earlier.
However, the industrial output marked the first monthly contraction since October 2009, as it dropped 1 percent from July due to a decline in market demand for automobiles. The production in the automobile sector fell 13.3 percent in August.
The factory operating rate declined 3 percentage points from the previous month when the figure rose to the highest level since Seoul started recordkeeping in January 1980. The government thinks that a seasonal factor, or the summer vacation season, partly affected the decrease.
“In August, consumption as well as industrial output remained in negative territory because a large number of people took off on summer vacations,” said Yoon Jong-won, director general of economic policy at the Ministry of Strategy and Finance.
“A drop in the factory operating rate is because companies upgraded their assembly lines. We think it does not indicate the economy is weakening.”
Despite the decline in the automobile sector, overall figures were backed up by solid performance in the machinery equipment sectors and semiconductors.
Machinery equipment output advanced 62.6 percent year-on-year, while semiconductors and electronics parts production rose 26 percent.
Meanwhile, the leading economic composite index continued its fall, as it contracted by 0.8 percentage point from a month ago following the previous month’s 0.4 percentage point drop. The index is used to predict the economic performance eight to 15 months ahead.
The report said that retail sales dipped 0.7 percent in August from a month earlier but increased 9.3 percent from a year ago, while facility investment expanded 39.8 percent on-year and grew 6.2 percent vis-a-vis July.
Output in the service sector grew 4.2 percent year-on-year in the cited month, although it fell 0.2 percent on-month.
“Although the index waned, it is tough to say the economy is faltering. As it might be imminent, we need to monitor the more indexed in the future,” said an official of Statistics Korea.