Surging In-Person and Outing Consumption... 'Clothes, Shoes, and Cosmetics' Are Selling

3-Up Industrial Activity Trends

[Sejong=Asia Economy Reporters Son Seon-hee and Moon Chae-seok] Consumer spending, which had been frozen throughout the winter due to the COVID-19 pandemic, is finally reviving with the arrival of spring. In particular, as spring outings increase, consumption has significantly risen centered on semi-durable goods such as clothing, shoes, and bags. Last month's consumption indicators showed the largest improvement since August of last year, when the second wave of infections spread. The government gave a positive assessment, calling it a 'sign of economic recovery.' However, with social distancing measures extended further and concerns about a fourth wave still present, it is uncertain whether this recovery trend will continue.

◆Clothing and Cosmetics Consumption Soars: "Impact of Weather and Eased Social Distancing"= According to the 'March Industrial Activity Trends' released by Statistics Korea on the 30th, sales of items such as clothing, shoes, bags, and cosmetics increased last month. As a result, the retail sales index rose by 2.3% compared to the previous month, marking a turnaround to growth. Compared to March last year, when consumption sharply contracted due to the initial outbreak of COVID-19, the increase was even larger at 10.9%.

Seasonal effects were also reflected in production indicators. Among the detailed categories of service production, accommodation and food services grew by 8.1%, showing the largest increase, while transportation and warehousing also rose by 5.8%. Assistant Director Uh explained, "The easing of social distancing measures along with weather factors contributed to a significant alleviation of the slump in face-to-face service industries," adding, "This helped industrial production rise for two consecutive months."

The coincident index of economic activity, which reflects the current economy, rose by 0.5 points from the previous month to 100.2, while the leading index, which predicts future economic conditions, increased by 0.2 points to 103.1.

However, experts remain cautious about the consumption recovery. Professor Sung Tae-yoon of Yonsei University's Department of Economics said, "March is typically a month when consumption improves, so while related indicators have improved, this appears to be largely due to seasonal effects." He added, "Considering this, the economic recovery is essentially close to stagnation." He further predicted, "Since vaccines have not been fully distributed and it remains difficult to control the spread of COVID-19 infections, consumption in April is likely to contract somewhat."

Professor Kim So-young of Seoul National University's Department of Economics also emphasized the need to view the current economic situation comprehensively, stating, "The fact that the service sector has improved despite the ongoing spread of COVID-19 could also be seen as a sign that the effectiveness of quarantine measures has diminished." She forecasted, "Recovery will proceed very slowly until herd immunity is established."

◆Impact of the 'Vehicle Semiconductor Shortage'... March Automobile Production Turns to Decline= Domestic manufacturing production decreased. The recent global shortage of vehicle semiconductors had a significant impact. Due to disruptions in parts supply, related companies either halted operations or shifted to partial operation, adjusting production volumes. Domestic automobile production last month fell by 4.8%, turning to a decline. Production of machinery equipment also dropped by 3.0%, as output of items such as packaging and filling machines and presses decreased. The average operating rate of manufacturing plants fell by 2.4 percentage points from the previous month to 75.0%.

However, this also reflects a base effect following the record-high manufacturing indicators in February. The Ministry of Economy and Finance stated, "To solidify the economic recovery and stabilize livelihoods, we will strengthen efforts to enhance private sector vitality and manage risks under thorough quarantine responses."

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