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Key economic indicators fall in July amid global uncertainty

Published: 31 Aug. 2023, 18:53

PARK EUN-JEE
[email protected]

An official from Statistics Korea speaks during a briefing on monthly industrial output in the central city of Sejong on Aug. 31, 2023. [YONHAP]

Korea saw a trio of key economic indicators — industrial output, retail sales and facility investment — fall in July, as the effects of an economic downturn in China and sluggish automobile sales kick in.

The industrial output fell 0.7 percent in July from a month earlier after standing still in June, according to data from Statistics Korea Thursday.

This is the first time since January that all three indicators have dropped simultaneously.

The output in the mining, manufacturing, gas and electricity industries decreased 2 percent due to a slump in the electronic components sector, which fell 11.2 percent.

The output of semiconductors fell 2.3 percent on-month. Shipments fell 31.2 percent, with inventories rising 4 percent over the period, according to the data.

The decrease, however, was limited as the production of apparel advanced 28.5 percent over the period.

The service output added 0.4 percent in July on the back of the information and communication segment. The output from the retail and wholesale sector, however, slid 1.2 percent.

Retail sales, a gauge of private spending, fell 3.2 percent over the period, led by weak demand for durable goods, including automobiles, which dropped 5.1 percent.

The demand for semidurable goods, including clothes, moved down 3.6 percent on-month in July.

Facility investment slid 8.9 percent on-month in July, due mainly to the sluggish performance of the transportation equipment and machinery segments.

It was the sharpest decline since the 12.6 percent drop tallied in March 2012.

"The economy appears to be in a sluggish state," an official from the agency said. "Retail sales and facility investment fell by a wide margin amid weaker automobile sales."

With a special tax cut on car purchases ending in July, many consumers bought their vehicles in advance, which contributed to slumping car sales last month.

The official added that people avoided outdoor activities amid heavy rains during the month, leading to an overall decline in consumer sales.

In a separate report, the Ministry of Economy and Finance attributed the decrease to "temporal factors," such as weather conditions, noting that overall industrial activities remain on a recovery trend.

"The export volume of chips is also showing signs of a rebound, with the service sector continuing its recovery as well," the finance ministry said. The export volume of semiconductors moved up 4 percent on-year in July.

The ministry added it will closely monitor any potential impact from China's property market crisis and other global uncertainties.

BY PARK EUN-JEE, YONHAP [[email protected]]