Production, Consumption, and Investment 'Triple Decline'... Clear Signs of Economic Recession (Update)

원본보기 아이콘

The three major indicators showing industrial activity in the first month of this year?industrial production, retail sales, and investment?all declined simultaneously. This triple decline, including a drop of over 14% in facility investment, occurred for the first time in two months since November last year. The leading index, which forecasts future economic conditions, also fell.

According to the "January 2025 Industrial Activity Trends" released by Statistics Korea on the 4th, total industrial production last month decreased by 2.7% compared to the previous month. This is the largest decline in 4 years and 11 months since February 2020.

Looking at industrial production by sector, production increased in public administration (2.2%), but decreased in mining and manufacturing (-2.3%), services (-0.8%), and construction (-4.3%).

Among mining and manufacturing, production declined in machinery and equipment (-7.7%) and electronic components (-8.1%), while production increased in other transportation equipment (2.8%).

Manufacturing inventory decreased by 0.3% compared to the previous month, and the average operating rate rose by 0.5 percentage points to 73.8%.

Consumption indicators also continued to show a sluggish trend. Retail sales, which reflect consumption trends, fell by 0.6% compared to the previous month. Sales increased in durable goods such as telecommunications devices and computers (1.1%), but decreased in semi-durable goods like clothing (-2.6%) and non-durable goods such as cosmetics (-0.5%).

Another pillar of domestic demand, construction, also showed a sluggish trend. As the construction market froze, construction performance in civil engineering and building sectors, represented by construction output, decreased by 4.3% compared to the previous month. Construction (-4.1%) and civil engineering (-5.2%) both saw declines in construction performance.

Domestic machinery orders increased by 38.1% year-on-year, with orders rising in both public (93.1%) and private (34.7%) sectors.

Facility investment decreased by 14.2% compared to the previous month, with investments declining in machinery such as semiconductor manufacturing equipment (-12.6%) and transportation equipment including other transportation vehicles (-17.5%).

The coincident index of economic activity, which reflects the current economy, fell by 0.4 points to 98.4 compared to the previous month, while the leading index, which forecasts future economic conditions, dropped by 0.3 points to 100.4.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.