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PRESS RELEASES

Production Grows due to Strong Exports while Investment Edges Down

  • DivisionEconomic Policy Bureau - Economic Analysis Division
  • DateSeptember 8, 2017
  • Tel044-215-2736

Current Economic Situation, September 2017

 

Production Grows due to Strong Exports

while Investment Edges Down

 

 

The Korean economy has seen all industry production edge up for the first time in four months backed by strong exports.  However, a slowdown in facility investment puts pressure on the economy.

 

The economy added 313,000 jobs year-on-year in July.  Employment in the manufacturing sector improved due to a low base effect, but job growth in the construction sector decelerated.

 

Consumer prices in August rose at a faster pace than the previous month (up 2.2%up 2.6%, y-o-y) due to high vegetable prices and a low base effect from the previous summer when electricity rates were cut temporarily.

 

Mining and manufacturing production rebounded in July (down 0.5% up 1.9%, m-o-m) backed by strong automobile and electronic parts production, and service output rose for the second consecutive month (up 0.6% up 0.6%, m-o-m) as wholesale & retail increased.

 

Retail sales rose for the second straight month in July (up 1.2% up 0.2%, m-o-m) backed by durable goods sales, such as communications devices, following the release of new smartphone models.

 

Facility investment fell in July (up 4.8% down 5.1%, m-o-m) due to a high base effect from the previous month when large investments were made on semiconductor manufacturing equipment.  Construction investment rebounded (down 0.4% up 3.6%, m-o-m) after declining for three consecutive months.

 

In July, the cyclical indicator of the coincident composite index stayed unchanged from the previous month at 100.7, and the cyclical indicator of the leading composite index rose 0.2 points to 101.7.

 

Exports increased for the tenth straight month in August (up 19.5%→ up 17.4%, y-o-y) backed by strong major export items, such as semiconductors and petroleum products.

 

In August, Stock prices fell as investors withdrew returns following a strong rally and North related risks heightened.  Both the dollar-won exchange rate and treasury bond yields rose.

 

Housing prices increased at a faster pace in August (up 0.18% up 0.25%, m-o-m) due to a price surge in the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices (up 0.06% up 0.08%, m-o-m) rose modestly.

 

The economic recovery is expected to continue backed by strong exports and successful implementation of supplementary budgets.  However, external and internal risks linger, such as trade issues, auto worker strikes and North related problems.

 

The government will strengthen its risk management, and will successfully carry out the new administration’s economic policies and supplementary budgets to create decent jobs and boost the real economy.

 

 

Key Statistics

 

 

Employment

 

 

2014

2015

2016

2017

Annual

Q4

Annual

Q1

Q2

Q3

Q4

Jul

Q1

Q2

Jun

Jul

Number of employed (million)

25.60

25.94

26.14

26.24

25.55

26.39

26.55

26.45

26.60

25.92

26.75

26.86

26.92

Employment rate (%)

60.2

60.6

60.5

60.4

59.1

60.8

61.1

60.7

61.2

59.4

61.2

61.4

61.5

(Seasonally adjusted)

60.2

60.3

60.5

60.4

60.5

60.1

60.5

60.6

60.3

60.8

60.6

60.5

60.6

 

 

Consumer Price Index

 

 

2016

2017

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

y-o-y

0.5

1.3

1.5

1.5

1.3

2.0

1.9

2.2

1.9

2.0

1.9

2.2

2.6

m-o-m

0.3

0.6

0.1

-0.1

0.1

0.9

0.3

0.0

-0.1

0.1

-0.1

0.2

0.6

 

 

Mining and Manufacturing Production

            (q-o-q, m-o-m, %)

Mining and Manufacturing2

2016

2017

Annual

Q2

Jul

Q1

Q21

May

Jun1

Jul1

Mining

(q-o-q, m-o-m)

-

1.4

1.1

1.6

-2.4

0.3

-0.5

1.9

(y-o-y)

1.0

0.7

1.5

3.7

0.5

0.3

-0.5

0.1

Manufacturing

Production

(q-o-q, m-o-m)

-

1.5

1.1

1.5

-2.5

0.2

-0.5

1.9

(y-o-y)

1.0

0.9

1.6

3.8

0.4

0.1

-0.7

-0.1

Shipment

-Domestic consumption

-Exports

0.6

1.3

-0.1

2.2

1.0

4.0

0.1

0.3

-0.3

0.5

0.0

0.9

-2.0

-2.1

-1.6

-0.3

-0.2

-0.4

2.0

0.4

4.0

0.6

0.5

0.8

Inventory3

-5.9

-2.3

-2.9

2.6

1.8

2.7

-3.6

0.8

Average operation ratio

72.6

72.8

73.7

72.8

71.5

71.5

71.2

73.4

Production capacity

(y-o-y)

0.8

0.4

1.0

1.5

0.9

1.0

0.6

0.6

  1. 1. Preliminary
  2. 2. Including mining, manufacturing, electricity and gas industry
  3. 3. End-period

 

 

Service Output

(q-o-q, m-o-m, %)

 

2015

                           2016

2017

Annual

Annual

Q1

Q2

Q3

Q4

Q21

May

Jun1

Jul1

Service

activity index

2.9

3.0

0.2

1.1

1.0

-0.3

0.6

-0.1

0.6

0.6

  1. 1. Preliminary

 

 

Retail Sales

(q-o-q, m-o-m, %)

 

2015

2016

2017

Annual

Q3

Q4

Annual

Q1

Q2

Q3

Q4

Q21

Jun1

Jul1

Retail sales

-

1.1

2.9

-

-0.2

2.0

-1.2

2.1

1.2

1.2

0.2

(y-o-y)

4.1

3.5

6.3

4.3

5.0

5.9

3.5

2.5

1.7

1.1

3.5

  1. 1. Preliminary

 

 

Facility Investment Index

(q-o-q, m-o-m, %)

 

2015

2016

2017

Annual

Annual

Q1

Q2

Q3

Q4

Q1

Q2¹

May

Jun¹

Jul¹

Facility investment index

6.9

-1.3

-6.5

5.1

-1.9

8.0

5.6

4.4

2.2

4.8

-5.1

y-o-y

-

-

-7.6

0.6

-4.7

5.9

18.1

17.7

20.0

18.5

25.0

  1. 1. Preliminary

 

 

Construction Completed

(q-o-q, m-o-m, %)

 

2015

2016

2017

Annual

Annual

Q1

Q2

Q3

Q4

Q1

Q2¹

May

Jun¹

Jul¹

Construction completed (constant)

5.0

15.4

6.2

2.3

4.2

4.1

5.9

-1.0

-1.7

-0.4

3.6

y-o-y

-

-

13.2

15.8

14.5

17.7

17.9

13.7

14.9

8.7

14.1

  1. 1.  Preliminary

 

 

Composite Index of Coincident and Leading Indicators

 

 

2016

2017

Dec

Jan

Feb

Mar

Apr

May¹

Jun¹

Jul¹

Cyclical indicator of coincident composite index

100.5

100.7

100.7

101.0

101.0

100.8

100.7

100.7

(m-o-m, %)

0.2

0.2

0.0

0.3

0.0

-0.2

-0.1

0.0

Cyclical indicator of leading composite index

100.6

100.7

100.9

100.8

101.0

101.2

101.5

101.7

(m-o-m, %)

0.1

0.1

0.2

-0.1

0.2

0.2

0.3

0.2

  1. 1. Preliminary

 

 

Exports and Imports

(US$ billion, y-o-y, %)

 

2014

2015

2016

2017

Annual

Annual

Annual

Q1

Q2

Q3

Q4

Aug

Q1

Q2

Jul

Aug¹

Exports

572.66

526.76

495.43

115.19

126.02

121.85

132.36

40.12

132.10

147.20

48.84

47.12

(y-o-y)

2.3

-8.0

-5.9

-13.7

-6.7

-5.0

1.8

2.6

14.7

16.8

19.5

17.4

Average daily exports

2.11

1.93

1.81

1.73

1.88

1.78

1.86

1.67

1.96

2.21

2.08

1.96

Imports

525.51

436.50

406.19

93.83

99.30

102.46

110.59

35.10

116.25

117.34

38.56

40.10

(y-o-y)

1.9

-16.9

-6.9

-16.0

-10.1

-5.1

4.1

1.0

23.9

18.2

15.5

14.2

Average daily imports

1.94

1.60

1.49

1.41

1.48

1.50

1.56

1.46

1.72

1.76

1.64

1.67

  1. 1. Preliminary

 

Please refer to the attached PDF