Retail sales slide as investment jumps

Korea's industrial output remained flat in July from a month earlier, data showed Monday, with retail sales losing ground, while facility investment advanced.

Industrial production remained unchanged in July from a month earlier, according to data from the Ministry of Data and Statistics.

Industrial output fell 0.5 percent and 0.4 percent in April and May, respectively, before rebounding 2.4 percent in June.

Output in the mining and manufacturing sector, a key pillar of the economy, edged up 0.2 percent on the back of the electronic component segment, which increased 20.7 percent. The output in the automobile industry, on the other hand, fell 4.5 percent.

Semiconductor output also edged up 0.5 percent.

"Production of electronic components rose significantly following the release of new smartphones by Samsung Electronics," said Lee Doo-won, a senior statistics official. "The automobile industry, on the other hand, apparently saw a decline due to a base effect from the previous month's increase, as well as a strike at Hyundai Motor." 

Service sector output, however, contracted 1.3 percent from a month earlier in July. It was the sharpest drop since the 1.7 percent fall posted in February 2022, apparently due to high consumer prices and a heat wave.

Output in the information and communication segment rose 3.5 percent, while that in the finance and insurance segment decreased 4.8 percent.

"[The decrease in the finance industry] was due to lower stock market turnover," Lee pointed out.

Retail sales, a gauge of private spending, backtracked 2.4 percent over the period, led mostly by durable goods, including cars.

The report showed that sales of semidurable goods, such as clothes, fell 1.4 percent, while sales of durable goods slid 7.7 percent. Sales of nondurable goods, including cosmetics, slipped 0.1 percent.

Facility investment shot up 7.5 percent in July from a month earlier, the latest findings showed.

It marked the largest growth since the 15 percent surge posted in February.

The report showed investment in transportation equipment rose 15.4 percent, while investment in machinery, including semiconductor production equipment, increased 4.2 percent.

In a separate report, the Ministry of Finance and Economy said it was notable that Korea posted growth in mining and manufacturing output for two straight months, supported by robust exports.

"In July, production and investment remained solid, sustaining the momentum of the economic recovery," the Finance Ministry said. "However, challenges remain amid external uncertainties, including the war in the Middle East and its impact on inflation, as well as weakness in youth employment."

The government will come up with additional measures to support people's livelihoods ahead of next month's Chuseok harvest holiday, it added.

Yonhap