South Korea’s factory output extended losing streak into the third month in the steepest pace in 17 months in October while leading indices pointed to negative outlook as global supply instability weighed on production and corporate investments.

According to data released by Statistics Korea on Tuesday, the seasonally adjusted mining and manufacturing output in October fell 3.0 percent from a month ago on weaker vehicle and primary metal output amid chip supply setback, marking the biggest fall since 7.7 percent in May last year.

Against pandemic-ridden year-ago period, output was 4.5 percent higher.

Manufacturing output fell 3.1 percent on month in October on reduced automobile, primary metal, and machinery equipment production, which softened 5.1 percent, 5.9 percent, and 4.4 percent, respectively. Automaking shriveled in October due to global chip supply shortage.

Medical product, and tobacco production, meanwhile, were up 3.2 percent and 7.6 percent, respectively, in October from a month ago.

Inventory levels rose 3.5 percent on month and 7.2 percent on year in October. Factory operation averaged 71.1 percent, down 2.5 percentage points from the previous month.

Markets were rattled.

Korea’s benchmark Kospi closed down 2.42 percent at 2,839.01 on Tuesday. The Korean won fell 3.9 to 1,188.1 against the U.S. dollar.

Overall industrial output including services activity in October also fell 1.9 percent from the previous month, marking the largest on-month decline since April last year when industrial production fell 2 percent.

Services output declined 0.3 percent on reduced activity in finance and insurance and science and technology sectors.

Accommodation and restaurants gained 4.5 percent on month.

Against a year-ago period, services output increased 5.2 percent in October on higher production in wholesale and retail sector.

Retail sales gained 0.2 percent on month in October on higher demand for durable products like home appliances as well as semi-durable products. Sales of winter clothes and heating appliances increased.

Against a year ago, retail sales jumped 7.4 percent. Sales at department stores gained 22.8 percent, duty free stores 15 percent, convenience stores 5.4 percent, and large discount stores 4.5 percent, data showed.

Facility investment fell 5.4 percent on month in October on slowed investment in machinery and transportation equipment.

The cyclical component of composite coincident index, which reflects current economic situations, fell 0.2 points from the previous month.

The cyclical component of composite leading index, which predicts the turning point in business cycle, also declined 0.5 points.

Eo Woon-sun, a senior official at Statistics Korea, said that the economy was still in recovery phase on strong exports and improving consumer sentiment, although the pace has been moderated by undying spread of Covid-19, supply issues, and strong commodity prices.

By Lee Eun-joo

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