South Korea’s industrial output rebounded in March after two straight months of contraction largely due to recovery in auto-making, but offers little relief for the overall economy as manufacturing activity elsewhere remained weak amid slumping domestic demand.

According to Statistics Korea on Thursday, the seasonally adjusted mining and manufacturing output in April rose 3.4 percent on month, the strongest gain since November 2016. Against the year-ago period, it inched up 0.9 percent, after retreating 4 percent in March and 6.8 percent in February.

The main Kospi finished Thursday up 0.58 percent at 2,423.01. The Korean won rose 3.20 to 1,077.70 against the U.S. dollar.

Output in the automobile sector rose 6.7 percent on month, buoyed by increased shipment of auto parts and finished cars along with the normalization of the third largest carmaker GM Korea. Semiconductor output jumped 9.9 percent thanks to strong demand for memory and system chips.

Factory operation averaged 72.5 percent, up 2.2 percentage points from March, helped by the pickup in the automobile sector.

Due to slow demand at home and abroad, inventory level rose 1.3 percent on month and 9.5 percent on year.

Service sector output remained unchanged from the previous month. Transportation and logistics gained 3 percent, while wholesale and retail sectors fell 2.1 percent and insurance and finance sectors 2.1 percent.

Retail sales - a barometer for private consumption - fell 1 percent after three straight months of sustained growth.

Capital investment fell 3.3 percent, extending the 7.8 percent loss in March, due to a 17.4 percent drop in transportation equipment.

Both coincident and leading indicators, which measure present and future economic activities to suggest where the business cycle is at or heading, pointed to a receding economy. The coincident index that had hovered below the 100 threshold since December slipped further to 99.7 in March from 99.8 over the previous four months. The leading indicate also dropped to 100.0 from 100.4 in the previous month. In OECD metrics, a value under 100 means that industrial production is below its long-term level to imply a negative output gap.

By Kang Doo-soon and Kim Hyo-jin

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