Due to the Impact of COVID-19, Manufacturing Production Plummets... Semiconductor and Automobile Industries Take Direct Hit

(Photo) [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] It has been revealed that manufacturing production significantly contracted last month due to the impact of the novel coronavirus infection (COVID-19). In particular, semiconductors and automobiles, which are our key industries, were directly hit.

According to Statistics Korea's "April Industrial Activity Trends" released on the 30th, overall industrial production increased in the service sector (+0.5%) but decreased in mining and manufacturing, including manufacturing (-6.0%), and construction (-2.4%), resulting in a 2.5% decline compared to the previous month. This marks the fourth consecutive month of decline.

Especially, manufacturing production fell by 6.4% month-on-month due to decreases in semiconductors (-15.6%) and automobiles (-13.4%). Manufacturing shipments also declined by 7.2% overall, with exports down 12.9% and domestic demand down 2.4%.

The average operating rate of manufacturing was 68.6%, down 5.7 percentage points from the previous month. This is the lowest level in 11 years and 2 months since February 2009 (66.8%), and the largest drop since December 2008, when it fell by 7.2 percentage points.

An Hyeong-jun, Director of Economic Statistics Trends at Statistics Korea, said, "Until March, exports were carried out based on orders and shipments, so the impact of COVID-19 on exports was limited. However, in April, the spread of COVID-19 and economic lockdowns in major export countries such as the United States and Europe affected our exports and manufacturing production."

The coincident index and leading index cyclical components, which indicate the current economic situation and future economic phases, both declined for three consecutive months. The decline in the coincident index cyclical component was -0.6 percentage points in February, -1.2 percentage points in March, and -1.3 percentage points in April, gradually widening. Last month's decline was the largest since March 1998, when it fell by 2 percentage points. The leading index cyclical component also decreased by 0.5 percentage points.

Director An said, "The significance of this sharp drop in the coincident cyclical component is that the Korean economy is deviating from its short-term growth trend. The fact that the decline is the largest in 22 years and 1 month means that the economic situation is very poor and the economy is significantly contracted."

However, service sector production increased by 0.5% month-on-month, despite decreases in transportation and warehousing (-2.9%) and professional, scientific, and technical services (-2.9%), due to increases in accommodation and food services (12.7%) and education (2.8%). The retail sales index rose by 5.3% compared to the previous month, with sales of semi-durable goods such as clothing (20.0%), durable goods such as passenger cars (4.1%), and non-durable goods such as cosmetics (1.6%) all increasing. Facility investment also increased by 5.0% month-on-month, with investments in transportation equipment such as automobiles (13.6%) and machinery such as computers and office equipment (1.8%) both rising.

This content was produced with the assistance of AI translation services.