Retail Sales Decline Again... "Due to Reduced Car Excise Tax Cut Rate and Decreased Policy Effects from Disaster Relief Fund Exhaustion" (Update)

Statistics Korea, July Industrial Activity Trends

Retail Sales Down 6.0%
Total Industrial Production Up 0.1% · Facility Investment Down 2.2%

[Sejong=Asia Economy Reporters Kim Hyunjung and Joo Sangdon] Consumption contracted again last month. The retail sales index fell 6.0% compared to the previous month, showing a decline for the first time in four months. Retail sales, which had risen due to policy effects such as the reduction of the individual consumption tax rate on automobiles and the distribution of emergency disaster relief funds, returned to a downward trend.

On the 31st, Statistics Korea released the "July Industrial Activity Trends" report containing these details.

Total industrial production increased by 0.1% compared to the previous month as production rose in mining and manufacturing, services, and construction sectors. This marks the second consecutive month of increase.

Mining and manufacturing production decreased in mining and electricity & gas sectors but increased in manufacturing, resulting in a 1.6% rise compared to the previous month. Manufacturing production declined in semiconductors (-4.8%) and electronic components (-6.6%) but increased in automobiles (14.4%) and machinery equipment (6.0%), leading to a 1.8% increase month-on-month. Manufacturing shipments rose 1.6%, and inventories increased by 0.2% compared to the previous month. The average operating rate was 70.0%, up 1.8 percentage points from the previous month.

The retail sales index decreased by 6.0% compared to the previous month as sales of durable goods such as passenger cars (-15.4%), semi-durable goods such as clothing (-5.6%), and non-durable goods such as pharmaceuticals (-0.6%) all declined. Ahn Hyeongjun, Economic Trend Statistics Officer at Statistics Korea, explained, "Looking at the retail sales trend, it contracted sharply in February and March, then increased significantly from April due to the reduction in automobile individual consumption tax, and from May to June due to disaster relief funds. However, as the tax reduction was scaled back from July and 90% of the relief funds were used up by June, the policy effects diminished, resulting in a decrease compared to the previous month."

Facility investment increased by 2.3% in machinery such as special industrial machinery but decreased by 14.7% in transportation equipment such as automobiles, leading to an overall 2.2% decline compared to the previous month.

Meanwhile, the coincident index of economic conditions, which reflects the current economic situation, rose by 0.2 points month-on-month, and the leading index of economic conditions, which forecasts future economic phases, increased by 0.4 points.

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