Industrial Production Recovers to Pre-COVID Levels... February Up 2.1% Month-on-Month (Update)

[Sejong=Asia Economy Reporter Moon Chaeseok] Last month, industrial production increased by the largest margin in eight months, recovering to pre-COVID-19 levels. Consumption turned to a decline for the first time in three months as demand for food and beverages at home, which had increased due to the COVID-19 pandemic, decreased.

According to the industrial activity trends announced by Statistics Korea on the 31st, total industrial production (seasonally adjusted, excluding agriculture, forestry, and fisheries) in February rose 2.1% compared to the previous month. This was the largest increase since 3.9% in June last year. Industrial production had increased for seven consecutive months since June last year, then decreased by 0.6% in January, before rebounding last month. The index recorded 111.6, the highest since the statistics began in January 2000. It recovered to the level of December 2019 (111.5), before the COVID-19 pandemic.

The increase in manufacturing production by 4.9% significantly contributed to the 4.3% rise in mining and manufacturing production. Although it decreased by 1.2% in January, it turned to an increase within a month. Semiconductor production (7.2%), including DRAM and flash memory, increased, and chemical products (7.9%) also showed a strong performance. Telecommunications and broadcasting equipment (-10.5%) and other transportation equipment (-6.4%) decreased.

Service industry production increased by 1.1%, breaking the two-month consecutive decline. Accommodation and food service production surged by 20.4%, influenced by the easing of gathering bans and business restrictions. From the 15th of last month, social distancing levels in the metropolitan area were lowered from level 2.5 to 2, and in non-metropolitan areas from level 2 to 1.5. Operating hours restrictions for multi-use facilities such as restaurants, cafes, and gyms in the metropolitan area were extended from 9 p.m. to 10 p.m. Transportation and warehousing also increased by 4.9%, influenced by increased export-import volumes and freight and passenger transport.

However, retail sales, which indicate consumption trends, decreased by 0.8%. This marked a decline for the first time in three months since -0.3% in November last year. It was the largest decrease in seven months since -6.1% in July last year. The main cause of the retail sales decline was a 3.7% drop in non-durable goods such as food and beverages, as dining out demand increased with eased social distancing while home-cooked meals decreased. Durable goods sales, including telecommunications devices and computers, increased at the end of January due to new product launches but decreased by 1.7% in February due to the base effect. By store type, retail sales increased in department stores (12.1%) and specialty stores (7.4%), but decreased in large discount stores (-10.1%) and supermarkets and general stores (-6.8%), where food and beverage consumption is significant.

Facility investment also decreased by 2.5%, turning to a decline for the first time in four months since -5.0% in October last year. Construction performance, which reflects actual construction work by construction companies, increased by 6.5%.

The coincident index of economic indicators, which reflects the current economy, rose by 0.3 points from the previous month. The leading index of economic indicators, which predicts future economic conditions, increased by 0.2 points, continuing its upward trend for nine consecutive months. This is the longest period of increase since the 12 consecutive months from February 2009 to January 2010.

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