Two key economic indicators released Thursday sent mixed signals about the health of Korea’s economy. There were some improvements in manufacturing but persistent weakness in private consumption and investment.
The country’s industrial production swung to on-month growth in February, led by chips and mobile gadgets, while a key gauge of business sentiment made a turnaround in March after five months of decline.
Output for all industries increased 0.8 percent from a month earlier, compared to a 1.5 percent contraction in January. From a year ago, the output grew 2.4 percent.
The mining and manufacturing sectors led the increase, logging an output growth of 3.3 percent, the highest on-month gain since September 2009. Compared to the corresponding month in 2015, the output was up 2.4 percent. Semiconductor output posted an increase of 19.6 percent month-on-month and 33.7 percent year-on-year.
“The key attributor to the improvement (in total industrial output last month) was local chipmakers, who increased production to provide mobile chips for newly released smartphones,” said Choi Jung-su, director of the short-term industrial statistics division at Statistics Korea.
The rise in overall factory output was accompanied by a pickup in the Bank of Korea’s business survey index for manufacturers for the upcoming month, which offers clues on their spending on new purchases, facilities and workers.
The April BSI reading rose to a five-month high of 70. The index had been at 66, an eight-month low, for the previous two months. A reading below 100 indicates pessimists outnumber optimists.
Improvements in factory output and manufacturing sentiment came alongside an uptick in the consumer sentiment index released a day earlier.
Thursday’s data, however, also revealed that domestic consumption and investment are continuing to contract.
Domestic consumption fell 1.8 percent in February from a month earlier, decelerating from January’s 1.3 percent fall. Facility investment dropped by 6.8, the steepest on-month decline since August, 2014.
Experts remained cautious about the economy’s overall recovery path, waiting for updates on exports slated for Friday release. Overseas shipments plunged 12.2 percent in February from a year ago, extending their period of monthly declines to the longest stretch on record.
BOK Gov. Lee Ju-yeol said Wednesday that the economy was recovering slower than expected and that it may miss the bank’s annual gross domestic product growth forecast of 3 percent. The economy grew 2.6 percent in 2015.
The BOK is to release revised forecasts on April 19.
By Lee Sun-young (milaya@heraldcorp.com)