Industrial activities remain sluggish

Service sector's output grows, manufacturing production shrinks

By Yoon Ja-young

The country’s industrial output grew 0.3 percent in October from a month earlier, the first gain in three months, Statistics Korea said Friday.

Production in manufacturing and mining shrank 1.6 percent month-on-month, reflecting the lack of momentum for economic recovery.

Service sector output rose 0.8 percent.

The manufacturing sector’s operation ratio fell to 73.5 percent from 75.1 percent the previous month.

“Despite the slight increase in all industry production, the momentum of recovery is still feeble at best as manufacturing sector remains sluggish,” a Statistics Korea spokesperson said.

The official said sluggish sales of handsets since subsidies were capped also negatively affected overall industry activities.

Retail sales fell 0.4 percent from September, as sales in durable goods such as handsets and other communication devices dropped 6.2 percent.

Facility investment fell 4.6 percent from a month earlier as investment in machinery and transport facilities fell. Facility investment is down 8.8 percent from a year ago.

Construction orders plunged 20.8 percent from the previous month, mainly due to a fall in public construction orders.

Business sentiment is showing signs of a modest improvement, but consumer sentiment remains sluggish, with the index dropping to 103 in November, from 107 in September and 105 in October.

Economists are not very optimistic about Korea’s economy next year.

Hyundai Research Institute expects momentum for industrial recovery to be limited because external and internal conditions are not good.

“Due to vulnerable external and internal conditions, the recovery will be very limited in 2015,” said researcher Ju won. “Some industries facing structural recession may have trouble surviving.”

He expects the automobile industry and IT industry to slow.

“While automobile exports are expected to have limited growth, they will suffer in the domestic market with consumers increasingly turning their eyes to imported cars.

“Meanwhile, the IT industry will lose a considerable part of their market share to foreign competitors, especially those with smart devices and home electronics.”

He said steel, chemicals and shipbuilding companies would suffer from global oversupply.