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Industrial output down 1.6 % in December amid weak exports

Jan. 31, 2023 - 09:30 By Yonhap

South Korea's industrial output fell 1.6 percent on-month in December, data showed Tuesday, as the manufacturing sector remained sluggish amid weak exports.

Industrial production decreased at the widest margin in 32 months, shifting from a 0.4 percent rebound posted in November, according to the data from Statistics Korea.

The output in the mining, manufacturing, gas and electricity industries fell 2.9 percent on-month in December, due to the sluggish performance of the automobile and electric parts sectors, which decreased 9.5 percent and 13.1 percent, respectively.

The output of the mainstay chip industry, on the other hand, rose 4.9 percent over the period, the data showed.

"While the chip sector rebounded temporarily in December as it had been extending losses since the second quarter, the output of cars and electric parts decreased amid the weak global economy and the falling demand for mobile devices," an official from the agency said.

The latest overall decrease in the output came amid South Korea's weak exports. For December, monthly exports fell 9.5 percent on-year to stand at $54.99 billion, extending the losing streak to the third consecutive month.

The data also showed that the output from the service sector declined 0.2 percent on-month in December as losses from transportation, restaurants and accommodation sectors offset gains from financial industries.

It was the first time in more than 12 years that the service output lost ground for four consecutive months. Experts attributed the decrease to inflation and higher borrowing costs.

Retail sales, a gauge of private spending, rose 1.4 percent over the period, on the back of stronger sales of semidurable goods, such as clothes, amid the cold weather.

Facility investment dropped 7.1 percent on-month in December due to the machinery and transportation equipment sectors, the data also showed.

For all of 2022, however, the country's industrial output advanced 3.3 percent on-year, with retail sales and facility investment also gathering ground.

The increase came as the output in the mining, manufacturing, gas and electricity industries advanced 1.4 percent on the back of the electronic parts and chemical sectors, although the performance of the chip and automobile players remained sluggish.

The output from the service sector advanced 4.8 percent on-year in 2022, on the back of the robust performances of the accommodation, restaurant, financial and insurance sectors, it added.

Retail sales in 2022 moved up 0.2 percent on-year on the back of stronger sales of clothes and medical supplies.

Facility investment increased 3.3 percent over the period, the data added, led mainly by the machinery and transportation equipment sectors.

As for 2023, the finance ministry said the country's exports are anticipated to remain sluggish amid the weak global economy, coupled with higher interest rates.

The reopening of the Chinese economy, on the other hand, will lend hands to South Korea's industrial output, although the downcycle of the chip industry will continue to weigh down the overall performance.

"The slump in the real estate market, the high level of inflation, and uncertainties stemming from major countries' monetary policies are risks (for South Korea's industrial output)," the ministry said.

The country's consumer prices, meanwhile, grew at the fastest pace in more than two decades in 2022, rising 5.1 percent on-year. (Yonhap)