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S. Korea’s industrial output, investments mark 2-month fall in December

CCI and CLI both extend into 7th monthly decline, indicating sluggish upcoming year

South Korea saw a decline in both production and investment, marking two consecutive months of downtrend amid slowing exports of key sectors, government data showed Thursday.

The country’s industrial output fell 0.6 percent in December from a month earlier, reflecting the decreased exports of automobiles and semiconductors, according to data compiled and released by Statistics Korea.

An official of Statistics Korea speaks Thursday in a briefing on the country's industrial trend indexes. (Yonhap)
An official of Statistics Korea speaks Thursday in a briefing on the country's industrial trend indexes. (Yonhap)

The production of semiconductors and cars -- the two primary exports for Asia’s fourth-largest economy -- respectively fell 4.5 percent and 5.9 percent on-month, as exports for the corresponding sectors each shed 5.9 percent and 10.5 percent during the same period.

While production in the service sector fell 0.3 percent on-month, retail sales gained 0.8 percent due to increased sales of cars and apparels in the domestic market.

Throughout 2018, Seoul’s industrial output rose 1 percent from a year earlier, marking the slowest growth pace since 2000 when the statistics office started compiling the data.

Also, facility investment slipped 0.4 percent in December from a month earlier, prolonging the downtrend for a second straight month, as imports of display manufacturing equipment declined. The value of construction completed, on the other hand, climbed 2.4 percent on-month, ending a four-month downtrend.

The Coincident Composite Index and Composite Leading Index -- the former indicating the current economic situation and the latter predicting the economic trend of six months to a year later -- both fell in December, suggesting the latest slowdown is likely to continue throughout the year.

CCI fell 0.2 percent in December from a month earlier, marking a downtrend for nine consecutive months, which was the first such case since the 1997-1998 period. CLI also marked seven months straight of decline, shedding 0.2 percent on-month in December.

This was the first time since 1970 that both indexes prolonged a seven-month decline simultaneously, according to the office.

There had been a case when the CCI and CLI both fell for eight consecutive months back in 1972, but the latest figure marked the first such case since the given figures hit their low in early 1972, the office explained.

“Production and facility investment decreased, but the rebound in the construction sector is partly making up for the fall,” an official at Kostat’s industrial trend department said in a briefing.

The official, however, expressed some concerns about the CCI and CLI decline.

“One should not read too much into (the double plunge of the indexes) as the leading index recently tends to assimilate with the incumbent index,” she said.

“But it is nevertheless true that the growth rate has been slowing down since 2012 and that the overall economy remains sluggish.”

By Bae Hyun-jung (