Korea’s May output growth falters on softening chip demand

2018.06.29 10:40:24 | 2018.06.29 16:03:02

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South Korea’s industrial output gained for the second straight month in May on revived automaking activity from releases of new models while domestic demand worsened, data showed.

According to Statistics Korea on Friday, the seasonally adjusted mining and manufacturing output in May rose 1.1 percent on month, slowing from the 3.1 percent gain in April due to softening in semiconductor shipments that primarily fueled export growth. Against the year-ago period, factory output was up 0.9 percent.

The main Kospi ended Friday 0.5 percent lower at 2,326.13. The Korean won finished 0.8 percent up at 1,114.50 against the U.S. dollar.

While semiconductor output fell 7 percent on month, the automobile sector jumped 5.5 percent on increased demand for sport utility vehicles and eco-friendly cars. Shipment of communication equipment also jumped 30.3 percent thanks to the release of new smartphones.

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Factory operation averaged 73.9 percent, up 1.5 percentage points from April.

Inventory level fell 0.3 percent on month but rose 5.4 percent on year.

Service sector output slipped 0.1 percent on month. While healthcare and social welfare gained 0.9 percent, information and communications sector fell 2.2 percent and sewage and waste treatment 3.4 percent.

Retail sales - a barometer for private consumption - fell 1 percent, extending its 0.9 percent loss in April. Durable goods were down 3.3 percent as demand for new cars failed to keep up. Non-durable goods also slipped 1.4 percent due to a decline in tourist numbers.

Capital investment fell 3.2 percent on month, posting losses for the third straight month due to inactivity in shipbuilding and slower demand in the chip sector.

The leading indicator, which measures future economic activities to gain a sense of where the economy is headed, slid further to 100.0 from 100.8 in January. In OECD metrics, a value under 100 means that industrial production is below its long-term level to imply a negative output gap.

By Cho Si-young and Kim Hyo-jin

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