South Korea's production, consumption and investment all rose in June, marking the first time all three major industrial activity indicators improved together since March.

Total industrial output posted its largest monthly gain in six years, driven by a normalization of automotive parts supply and a rebound in semiconductor production. Consumer spending also expanded on strong sales of passenger cars and home appliances.

Containers are stacked at Sinseondae Pier in Busan Port. [Yonhap]
Containers are stacked at Sinseondae Pier in Busan Port. [Yonhap]

According to the "June Industrial Activity Trends" report released by the Ministry of Statistics on Friday, the all-industry production index (seasonally adjusted, excluding agriculture, forestry and fisheries) rose 2.3 percent from the previous month to 120.1 (base year 2020=100).

Total industrial output had fallen for two consecutive months — down 0.5 percent in April and 0.4 percent in May — before rebounding in June. The increase was the largest since June 2020, when output rose 2.9 percent.

Mining and manufacturing output jumped 6.4 percent from the previous month, the biggest gain in six years. Automobile production rose 15.4 percent, and semiconductor output climbed 4.5 percent, reversing a 10.0 percent decline the previous month. Electronic components (-10.4 percent), communications and broadcasting equipment (-1.5 percent) and computers (-4.9 percent) all fell.

Lee Du-won, a senior statistics official at the Ministry of Statistics, said automobile production surged because parts supply disruptions caused by a fire at an engine components supplier in March had been resolved and both domestic and overseas demand had increased. "Semiconductor output fluctuates month to month based on production schedules, but last month demand rose broadly across both memory and non-memory chips, pushing production higher," he said.

Domestic demand indicators also showed signs of recovery. The retail sales index, which tracks product consumption, rose 2.7 percent from the previous month.

Durable goods sales surged 12.6 percent, driven by passenger cars and communications devices and computers — the highest growth rate since September 2009, when the figure reached 14.0 percent, making it the strongest reading in 16 years and nine months. Passenger car sales jumped 21.8 percent, the largest increase in six years and three months.

The surge in car sales reflected both the normalization of parts supply and a rush in demand ahead of the expiration of a reduced individual consumption tax at the end of June. Discount promotions on home appliances and communications devices by Samsung Electronics, LG Electronics and others also supported the rise in consumer spending.

Services output grew 0.7 percent from the previous month, led by finance and insurance and transportation and warehousing. Facilities investment expanded 5.8 percent, as spending on machinery including precision equipment rose 6.9 percent and investment in transportation equipment, mainly automobiles, increased 3.4 percent.

Construction work completed (in constant prices) rose 4.1 percent from the previous month, as a 5.9 percent increase in building construction more than offset a 1.3 percent decline in civil engineering work. However, new construction orders fell 28.1 percent from a year earlier, weighed down by weakness in the building segment, including factories and warehouses.

The cyclical variation index of the coincident composite index, which reflects current economic conditions, rose 0.5 point from the previous month, while the cyclical variation index of the leading composite index, which signals the future economic outlook, climbed 0.9 point.

On a quarterly basis, total industrial output in the second quarter rose 0.9 percent from the previous quarter. Over the same period, retail sales fell 1.7 percent, while facilities investment increased 3.6 percent.

For the first half of the year as a whole, total industrial output rose 2.8 percent, retail sales grew 2.8 percent and facilities investment expanded 11.4 percent. Construction investment, however, fell 5.3 percent. "Production, consumption and facilities investment are on an upward trend, but the construction sector remains sluggish," Lee said.

The government said it expects economic conditions to continue improving in the second half, pointing to sustained export growth in July and improving consumer and business sentiment. However, external uncertainty persists — including the renewed armed conflict between the United States and Iran — and the government pledged to press ahead with its second-half economic growth strategy while focusing on managing energy and supply chain risks and easing the burden on households through price and employment stability.


y2k@heraldcorp.com