By Kang Seung-woo
Despite 11 consecutive declines in the leading economic composite index, the government Thursday said the nation’s economic recovery has stayed on track.
“The nation’s leading economic indicator, which presages the state of economy in advance, is dropping,” said Yoon Jong-won, director general of economic policy at the Ministry of Strategy and Finance on Thursday. The coinciding index also fell for the fourth month in a row.
“It is premature to conclude that the continuous drop in the leading index means a faltering economic rebound.
Yoon cited November’s industrial output, which bounced back from a third consecutive month of the economy shrinking thanks to a rising demand for semiconductors and metal products.
According to Statistics Korea, the output in the mining and manufacturing industries climbed 1.4 percent in November from the previous month and added 10.4 percent, compared to a year earlier.
In the month-on-month comparison, production in the two sectors sank 1.3 percent in August, 0.3 percent in September and 4.2 percent in October.
Last month’s reading was the worst performance since December 2008 at the onslaught of the global financial crisis, when its month-on-month fall was 10.4 percent. On an annual basis, production has been rising since July 2009.
The output in fields of machinery and equipment, and semiconductors and manufacturing equipment gained 27.9 percent and 14.4 percent, respectively, compared to the same month last year.
From a month earlier, the output in audio-video equipment and pharmaceuticals decreased, but computer chips and related parts grew 1.3 percent, with metals products jumping 6.9 percent.
Local manufacturing plants operated at 80.9 percent of capacity on average in November, a 1.2 percentage point increase from the previous month, on the strength of a rebound in the production of semiconductors and vehicles.
However, the leading economic index, which projects economic activity eight to 15 months ahead, suffered an 11th straight month of contraction after falling 0.8 points from October. The drop reflects lower numbers for construction and machinery orders.
In addition, the coincident composite economic index, which measures the current business cycle, went down 0.2 point from a month earlier.
“The declines in the leading and coincident indexes have diminished, so economic factors in and out of Korea are likely to affect whether the declines will continue or not,” said an official of Statistics Korea.