Semiconductor Boost Drives December Production Up 0.3%... Facility Investment Turns Positive After 3 Months

Driven by semiconductors and automobiles, total industrial production increased by 0.3% in December last year. Facility investment turned to growth after three months, supported by imports of semiconductor manufacturing machinery.

According to the 'December 2023 and Annual Industrial Activity Trends' released by Statistics Korea on the 31st, total industrial production in December last year rose by 0.3% compared to the previous month.

Production in the manufacturing sector led the growth, with semiconductors (8.5%) and automobiles (4.7%) showing increases. Production of DRAM and silicon wafers rose, and in the automobile sector, production of finished vehicles such as recreational vehicles (RVs) and hybrid passenger cars increased. Notably, semiconductor production surged by 53.3% compared to the same month of the previous year.

Manufacturing inventories decreased by 4.4% from the previous month, while the average operating rate of manufacturing fell by 1.3 percentage points to 70.8% compared to the previous month.

Service sector production also increased by 0.3%. Financial and insurance services, including mutual aid businesses, grew by 4.9%, and production in the transportation and storage sector rose by 2.5%, driven by increases in maritime transport and air passenger transport.

Facility investment increased by 5.5%, boosted by higher investment in semiconductor machinery. This marks a return to growth after a 3-month decline since the 8.7% increase recorded in September last year. Although investment in transportation equipment such as automobiles decreased by 3.2%, investment in machinery including semiconductor manufacturing equipment rose by 8.9%.

However, compared to the same month last year, investment declined by 5.9%, as investments in machinery such as special industrial machinery (-7.1%) and transportation equipment including automobiles (-2.2%) both decreased.

Domestic machinery orders increased by 12.0% year-on-year, with orders rising in both the private sector (7.2%) and public sector (75.5%). Construction performance decreased by 2.7% month-on-month due to a 5.6% decline in building construction results. Construction orders rose by 34.9% year-on-year, driven by increased orders in civil engineering such as railroads and tracks (127.9%).

Retail sales fell by 0.8% compared to the previous month. Sales of non-durable goods such as food and beverages decreased by 0.7%, durable goods like communication devices and computers dropped by 1.2%, and semi-durable goods including entertainment, hobbies, and sports equipment declined by 0.3%.

By retail type, department store sales increased by 9.2% and large discount store sales rose by 2.4% year-on-year, but sales at specialty stores (-5.2%), convenience stores (-5.6%), supermarkets and general merchandise stores (-1.2%), and duty-free shops (-3.5%) decreased.

The coincident composite index, which reflects the current economic trend, fell by 0.3 points from the previous month, while the leading composite index, which forecasts economic trends six months ahead, rose by 0.1 points month-on-month.

Meanwhile, total industrial production for last year increased by 0.7% year-on-year, driven by growth in the service and construction sectors. Manufacturing production decreased by 3.8% year-on-year, as increases in automobiles and pharmaceuticals were offset by declines in electronic components and semiconductors. Service sector production rose by 2.9% year-on-year, supported by growth in finance, insurance, transportation, and storage.

The retail sales index declined by 1.4% year-on-year due to decreases in sales of non-durable goods such as food and beverages (-1.8%) and semi-durable goods like clothing (-2.6%). Facility investment fell by 5.5% year-on-year, with reductions in machinery such as special industrial machinery (-7.2%) and transportation equipment including automobiles (-0.4%). Construction performance increased by 7.7% year-on-year, with growth in both building construction (9.8%) and civil engineering (1.3%).

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