Due to COVID-19, October Consumption and Investment Decline, Production Halts (Comprehensive)

Semiconductor and Electronic Components Slump Causes 1.2% Drop in Manufacturing
Retail Sales Down 0.9%... Sharp Decline After 3 Months
Facility Investment Falls 3.3% MoM... Decrease After 2 Months
Coincident and Leading Index Cyclical Components Rise 0.5P and 0.4P Respectively

Photo by Yonhap News

[Asia Economy Reporter Kwangho Lee] As the spread of the novel coronavirus infection (COVID-19) continued, industrial production last month remained at the previous month's level. Retail sales turned negative (-) for the first time in three months, and investment, which had been on the rise, also faltered.

According to the "October Industrial Activity Trends" released by Statistics Korea on the 30th, total industrial production (seasonally adjusted, excluding agriculture, forestry, and fisheries) remained flat compared to the previous month. This was due to an increase in the service sector but decreases in manufacturing and construction.

Manufacturing production decreased by 1.2% compared to the previous month. Semiconductors fell by 9.5% due to the base effect following the recent increase in memory semiconductors such as DRAM. Electronic components also shrank by 2.6% due to a decline in production of LCD-related items.

On the other hand, service sector production increased by 1.2% compared to the previous month, continuing an upward trend for two consecutive months following September's 0.3% rise. Accommodation and food services surged by 13.3% due to the easing of social distancing measures. Information and communication also grew by 2.6% due to increases in game and system-related software development and supply, as well as telecommunications.

Retail sales, which indicate consumer trends, decreased by 0.9%, showing a decline for the first time in three months. This was due to reduced sales of non-durable goods (-5.7%) such as food and beverages, following the easing of social distancing and increased dining out.

Facility investment decreased by 3.3% compared to the previous month, turning to a decline after two months. Construction performance, which reflects completed construction work, fell by 0.1% compared to the previous month. Construction orders (current) also decreased by 17.3% compared to a year ago.

The coincident index, which shows the current economic situation, rose by 0.5 points from the previous month to 98.3. The leading index, which forecasts future economic conditions, increased by 0.4 points from the previous month to 101.8. The simultaneous rise of both the coincident and leading cyclical indices has continued for five months, marking the longest consecutive simultaneous increase in 21 years and 2 months since the 12-month consecutive rise from September 1998 to August 1999.

An Hyeongjun, Director of Economic Trend Statistics at Statistics Korea, evaluated, "Overall, industrial activity trends show fluctuations due to the spread of COVID-19," adding, "Social distancing measures were strengthened in September and eased in October, leading to a rebound in the service sector but a decrease in consumption."

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