Production, Consumption, Investment... 'Triple Rebound' in December

Non-Face-to-Face Industries Drive Consumption

[Asia Economy Reporter Moon Chaeseok] In December last year, production, consumption, and investment all showed an increasing trend. Production increased due to the recovery of the semiconductor industry, and consumption rose mainly in non-face-to-face (untact) sectors due to the resurgence of COVID-19 and strengthened social distancing measures.

According to the 'December 2020 and Annual Industrial Activity Trends' released by Statistics Korea on the 29th, total industrial production in December last year increased by 0.5% compared to the previous month. Manufacturing production increased, leading to a 3.7% rise in mining and manufacturing production. In November, mining and manufacturing production was 0.3%. Similar to the annual indicators, semiconductors (11.6%) and machinery equipment (10.0%) increased, but automobiles decreased by 8.6%.

Service industry production decreased by 1.1%. This was largely influenced by accommodation and food services such as restaurants and bars, which recorded -27.3%. Transportation and storage (-3.2%) and arts, sports, and leisure (-15.8%) also showed sluggish performance. This marks a negative turnaround after four months since an 1.0% decrease in August last year.

Retail sales increased by 0.2% compared to the previous month as sales of nondurable goods such as food and beverages rose by 3.9%. The retail sales index was 114.3. Although sales of semi-durable goods such as clothing (-6.7%) and durable goods such as passenger cars (-1.7%) decreased, the increase in sales of nondurable goods such as food and beverages had an overall positive effect.

Facility investment increased by 0.9% compared to the previous month as investment in transportation equipment such as ships (3.4%) and machinery such as special industrial machines (0.2%) rose. The facility investment index excluding ships was 117.3.

The coincident index, which shows the current economic situation, stood at 98.9, remaining steady compared to the previous month. The leading index, which predicts future economic conditions, rose by 0.5 points from 102.5 in the previous month to 103.0. However, depending on the COVID-19 quarantine situation, the possibility of continued sluggish production in service sectors such as accommodation and food services cannot be ruled out.

Professor Sung Tae-yoon of Yonsei University’s Department of Economics said, "The improvement in the indicators in December last year compared to November reflects the decrease in daily confirmed cases as the level of quarantine was raised," adding, "If the third wave of COVID-19 spreads and confirmed cases increase again, the damage to accommodation and food service industries could be significant."

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