South Korea’s industrial activity rebounded in October on improvement on the domestic front, while indicators suggest the pickup may not last.
According to the Statistics Korea on Friday, the seasonally adjusted mining and manufacturing output in October rose 1.0 percent on month, reversing from a 2.7 percent fall in the previous month. It made a 10.7 percent jump against the same month last year when working days were fewer due to the Chuseok holiday.
The main Kospi closed Friday 0.82 percent lower at 2,096.86. The Korean won finished at 1,121.2, down 2.0, against the U.S dollar.
Output in the transportation equipment gained 8.0 percent on month on growth in shipbuilding orders. Metal processing output rose 6.4 percent from revived activity at shipyards. Automobile output, however, contracted 2.5 percent on month.
Factory operation averaged 74.0 percent, up 0.2 percentage point from September. Inventory level grew 0.6 percent on month.
Service sector output, an indicator for domestic demand, added 0.3 percent on month in its best figure since March this year. Finance/insurance and science/technology sectors gained 1.6 percent and 2.7 percent, respectively, while health/social welfare sector retreated 2.9 percent.
Retail sales - a barometer for private consumption - rose 0.2 percent on month, compared with a 2.1 percent fall in September. Durable goods like cars gained 1.7 percent on month on new car releases and tax incentives. Semi-durable goods like clothes were up 0.4 percent, mainly driven by the country-wide shopping discount events. Non-durable goods like food products were down 0.6 percent.
Capital investment gained 1.9 percent on month, staying on the positive territory for the second month in a row. Last time the figure gained for two straight months was in February this year. Investment in machineries like chipmaking machines was down 0.9 percent.
Machineries order jumped 7.6 percent on month, thanks to increased transportation equipment orders from both private and public sectors.
Despite the overall improvement, both coincident and leading indicators, which measure present and future economic activities to suggest direction of where the business cycle is at or heading, stayed negative.
The coincident index slipped by 0.2 point on month to 98.4, marking its seventh straight month of fall and the lowest since May 2009. The leading indicator also retreated by 0.4 point on month, sliding for the fifth month in a row. The index is at its worst since April 2009.
In OECD metrics, a value under 100 means that industrial production is below its long-term level to imply a negative output gap.
By Chung Seok-woo and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]