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PRESS RELEASES

Production and Investment Rise while Consumption Slows Down

  • DivisionEconomic Policy Bureau - Economic Analysis Division
  • DateFebruary 9, 2018
  • Tel044-215-2735

Current Economic Situation, February 2018

 

Production and Investment Rise while

Consumption Slows Down

 

 

The Korean economy continues to recover as all industry production and investment rose for the second consecutive month backed by strong exports.  However, consumption slowed down due to a base effect.

 

The economy added 253,000 jobs year-on-year in December 2017 as manufacturing and construction job growth improved, despite a slowdown in the service sector.  The youth unemployment rate increased (up 8.4%up 9.2%, y-o-y).

 

Consumer price inflation in January 2018 fell 0.5 percentage points from the previous month (up 1.5%up 1.0%, y-o-y).  The index rose 0.4 percent month-on-month due to a price hike in agricultural products.

 

All industry production in December increased for the second consecutive month (up 1.3%up 0.2%, m-o-m).  Mining and manufacturing production declined (up 0.2%→ down 0.5%, m-o-m) due to a slowdown in automobiles and mechanical equipment, and service output rose (up 2.5%→ up 0.2%, m-o-m) due to heavy trading in stocks and growth in R&D spending.

 

Retail sales fell in December (up 5.7% down 4.0%, m-o-m) as automobile sales declined due to a partial strike in the industry, as well as due to a base effect from the previous month when an early cold spell pushed up sales of winter clothes.

 

Facility investment rose for the second straight month in December (up 10.4% up 8.9%, m-o-m) due to increased imports in semiconductor manufacturing equipment.  Construction investment fell (down 2.4% down 0.3%, m-o-m) due to a slowdown in housing construction, although civil engineering works picked up as public investment in SOC projects increased.

 

In December, the cyclical indicator of the coincident composite index fell 0.3 points to 100.1, and the cyclical indicator of the leading composite index stayed unchanged from the previous month at 101.2.

 

Exports increased for the 15th consecutive month in January (up 8.9%→ up 22.2%, y-o-y) due to strong major export items, such as semiconductors, and more days worked.

 

In January, KOSPI edged up due to strong global markets and foreign purchases of Korean shares, and the dollar-won exchange rate fell amid the weak dollar.  Government bond yields rose.

 

Housing prices continued to grow in January (up 0.11% up 0.14%, m-o-m) as the prices picked up in the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices fell (down 0.03% down 0.05%, m-o-m) due to increased supplies.

 

The economy is expected to stay on a recovery path amid improving global economies and strong exports.  However, the youth unemployment rate has increased, and internal and external risks linger, such as trade issues and major economies’ monetary policy normalization.

 

The government will strengthen its risk management, and will work to translate the current economic recovery into job creation and improvement in the real economy by successfully implementing the 2018 economic policies.

 

 

Key Statistics

 

Employment

 

 

2014

2015

2016

2017

Annual

Q3

Q4

Dec

Annual

Q1

Q2

Q3

Q4

Nov

Dec

Number of employed (million)

25.60

25.94

26.24

26.55

26.45

26.17

26.55

25.92

26.75

26.83

26.70

26.85

26.42

Employment rate (%)

60.2

60.6

60.4

61.1

60.7

60.1

60.7

59.4

61.2

61.3

60.9

61.2

60.2

(Seasonally adjusted)

60.2

60.3

60.4

60.5

60.6

60.9

60.7

60.8

60.6

60.6

60.8

60.7

60.9

 

 

Consumer Price Index

 

 

2017

2018

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

y-o-y

2.0

1.9

2.2

1.9

2.0

1.9

2.2

2.6

2.1

1.8

1.3

1.5

1.0

m-o-m

0.9

0.3

0.0

-0.1

0.1

-0.1

0.2

0.6

0.1

-0.2

-0.7

0.3

0.4

 

 

Mining and Manufacturing Production

            (q-o-q, m-o-m, %)

Mining and Manufacturing2

2016

2017

Annual

Q4

Dec

Annual¹

Q4¹

Oct

Nov¹

Dec¹

Mining

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

-

0.6

-0.4

-

-1.4

-1.6

0.2

-0.5

(y-o-y)

1.0

2.8

4.3

0.6

-4.6

-6.3

-1.7

-6.0

Manufacturing

Production

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

-

0.8

-0.4

-

-1.6

-2.0

0.2

-0.7

(y-o-y)

1.0

2.9

4.4

0.5

-5.0

-6.5

-1.9

-6.6

Shipment

-Domestic consumption

-Exports

0.6

1.3

-0.1

1.2

2.7

-0.4

0.4

0.4

0.5

0.3

0.0

0.6

-1.4

-2.0

-0.5

-1.8

-4.1

0.9

1.6

3.6

-0.4

-2.3

-2.2

-2.6

Inventory3

-5.9

-3.2

-2.0

9.5

3.9

4.3

-1.7

1.3

Average operation ratio

72.6

72.4

72.7

71.9

70.9

71.1

71.2

70.4

Production capacity

(y-o-y)

0.8

1.6

1.9

1.1

0.7

1.1

0.6

0.4

  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

Q3

Q4

Annual¹

Q1

Q2

Q3

Q4¹

Nov¹

Dec¹

Service

activity index

2.9

3.0

1.0

-0.3

2.0

0.9

0.6

1.4

0.4

2.5

0.2

  1. 1. Preliminary

 

 

Retail Sales

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

 

2015

2016

2017

Annual

Annual

Q3

Q4

Annual¹

Q1

Q2

Q3

Q4¹

Oct

Nov¹

Dec¹

Retail sales

2.0

4.3

-1.2

2.1

2.7

-0.5

1.2

1.1

1.2

-2.9

5.7

-4.0

(y-o-y)

-

-

3.5

2.5

-

1.9

1.7

4.3

2.9

-0.2

6.5

2.2

  1. 1. Preliminary

 

 

Facility Investment Index

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

 

2015

2016

2017

Annual

Annual

Q3

Q4

Annual¹

Q1

Q2

Q3

Q4¹

Nov¹

Dec¹

Facility investment index

6.9

-1.3

-1.9

8.0

14.1

5.6

4.4

-0.4

-3.1

10.4

8.9

y-o-y

-

-

-4.7

5.9

-

18.1

17.7

20.6

1.9

6.6

2.4

  1. 1. Preliminary

 

 

Construction Completed

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

 

2015

2016

2017

Annual

Annual

Q3

Q4

Annual¹

Q1

Q2

Q3

Q4¹

Nov¹

Dec¹

Construction completed (constant)

5.0

15.4

4.2

4.1

10.0

5.9

-1.1

0.7

-2.4

-2.4

-0.3

y-o-y

-

-

14.5

17.7

-

17.9

13.6

13.4

-1.6

0.3

-2.9

  1.  1. Preliminary

 

 

Composite Index of Coincident and Leading Indicators

 

 

2017

May

Jun

Jul

Aug

Sep

Oct

Nov¹

Dec¹

Cyclical indicator of coincident composite index

100.8

100.7

100.7

100.8

101.0

100.4

100.4

100.1

(m-o-m, %)

-0.2

-0.1

0.0

0.1

0.2

-0.6

0.0

-0.3

Cyclical indicator of leading composite index

101.2

101.6

101.7

101.8

101.6

101.3

101.2

101.2

(m-o-m, %)

0.2

0.4

0.1

0.1

-0.2

-0.3

-0.1

0.0

  1. 1. Preliminary

 

 

Exports and Imports

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

 

2015

2016

2017

2018

Annual

Annual

Annual

Q1

Q2

Q3

Q4

Jan

Jan¹

Exports

526.76

495.43

573.72

132.06

147.05

151.06

143.55

40.26

49.21

(y-o-y)

-8.0

-5.9

15.8

14.7

16.7

24.0

8.5

11.0

22.2

Average daily exports

1.93

1.81

2.13

1.96

2.21

2.13

2.23

1.87

2.05

Imports

436.50

406.19

478.41

116.38

117.87

120.80

123.37

37.62

45.49

(y-o-y)

-16.9

-6.9

17.8

24.0

18.7

17.9

11.6

20.1

20.9

Average daily imports

1.60

1.49

1.78

1.72

1.77

1.70

1.91

1.75

1.90

1. Preliminary

 

Please refer to the attached PDF