As Vaccination Rates Rise, Consumption Surges to Highest Level in 6 Months

Statistics Korea September Industrial Activity Trends... Hong Nam-gi "Laying the Groundwork for Q4 Consumption Rebound, Promoting Measures to Boost Domestic Demand Vitality"

[Sejong=Asia Economy Reporter Son Seon-hee] As the COVID-19 vaccination rate improved, consumption last month surged at the largest rate in six months. This is analyzed to be due to the easing of social distancing and the COVID-19 mutual aid national support fund distributed last month. However, indicators such as manufacturing production worsened due to global supply chain disruptions.

According to the 'September Industrial Activity Trends' announced by Statistics Korea on the 29th, the retail sales index (seasonally adjusted) last month was 121.4 (based on 2015=100), rising 2.5%. After two consecutive months of decline in July (-0.5%) and August (-0.8%), it rebounded for the first time in three months. The increase was the largest since February (2.5%).

The all-industry production index (seasonally adjusted, excluding agriculture, forestry, and fisheries) last month rose 1.3% from the previous month to 113.1. This is also a rebound after three months. Eo Un-seon, Director of Economic Trend Statistics at Statistics Korea, said, "Production and sales both improved compared to the previous month due to strong service industry production and retail sales," adding, "The economy appears to be recovering from two consecutive months of stagnation and continuing an improving trend."

However, due to rising raw material prices and global supply chain disruptions, mining and manufacturing production (-0.8%) and facility investment (-1.0%) decreased. Manufacturing production, which accounts for a significant portion of mining and manufacturing production, decreased by 0.9%, and automobile production fell 9.8% from the previous month due to semiconductor supply disruptions for vehicles. The decline in automobile production is the largest since May last year (-24.3%).

Nevertheless, with improving external conditions such as strong exports and, above all, consumption reflecting domestic demand sentiment increasing despite the ongoing fourth wave of COVID-19, the government is optimistic. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "The revival of consumption recovery in September, the last month of the quarter, can be seen as laying the foundation for a consumption rebound in the fourth quarter," adding, "We will steadily implement measures to boost domestic demand vitality such as the mutual aid consumption support fund and consumption coupons linked to improved quarantine conditions, and ensure no disruption in efforts to reduce the burden on people's livelihoods, including compensation for small business losses and fuel tax reductions."

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