Korea’s June industrial output shows fastest rebound in 11 yrs

2020.07.31 10:26:33 | 2020.07.31 15:51:05

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South Korea’s industrial output in June made the fastest rebound in 11 years, helped by fiscal stimulus and relief actions against the coronavirus fallout.

The seasonally adjusted mining and manufacturing output in June jumped 7.2 percent from a month ago, bouncing back after two straight months of decline to mark the biggest gain since February 2009, Statistics Korea data showed Friday.

Against a year earlier, it was down 0.5 percent.

For the second quarter, factory output fell 7.1 percent versus the previous quarter and 5.1 percent from the year-ago period.

Factor operation averaged 68.3 in June, gaining 4.9 percentage points from the previous month but still subdued when compared to 72.2 a year ago. Inventory levels fell 1.4 percent on month but rose 2.0 percent from a year ago.

Weak global demand continued to weigh on manufacturing activity. Exports slipped 3.5 percent in June, although eased from the 12.8 percent dip in May.

The benchmark Kospi fell 0.78 percent to close Friday at 2,249.37. The Korean won gained 5.50, or 0.46 percent, against the U.S. dollar to 1,190.50.

Auto production surged 22.9 percent as economic activity resumed in major economies. Chip output also continued its strong march, climbing 3.8 percent on month, on sustained demand for memory chips powering data servers.

Service output rose 2.2 percent, keeping up last month’s increase of 2.4 percent. The education sector added 5.4 percent and the finance and insurance sector 2.8 percent.

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Retail sales, a barometer for private consumption, climbed 2.4 percent in June, extending gains for the third straight month as coronavirus stimulus checks and tax breaks on home appliances and durable goods continued to bolster spending.

Sales of durable goods rose 4.1 percent, as people rushed to buy cars before the tax break on new car purchases expires this month. Sales of semi-durable goods, like clothes, were up 4.7 percent.

Capital investment gained 5.4 percent in June, rebounding from the 6.6 percent fall in the previous month. Against a year ago, it jumped 13.9 percent.

Transportation equipment including automobiles saw investment soar 7.2 percent, while machinery rose 4.7 percent.

Leading indicators showed positive signs. Coincident and leading indicators both turned upward in June after four straight months of decline. The coincident index, which measures present economic activities, rose 0.2 point. The leading indicator, a gauge of where the economy is headed, also gained 0.4 point.

It remains to be seen, however, whether the pickup can be sustained and pull Asia’s fourth-largest economy out of a technical recession. Korea’s gross domestic product shrank 3.3 percent on quarter in the April-June period, deepening from a 1.3 percent fall in the first three months of the year.

By Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]