▲ Pyeongtaek Port with containers stacked up
Industrial production and consumption slowed down in July.
The slowdown was driven by a combination of base effects from the previous month, strikes at some production sites, a decrease in stock trading values, high inflation, and heatwaves.
On the other hand, fueled by the semiconductor boom, facility investment surged at the fastest pace in five months.
According to the July Industrial Activity Trends released by the National Data Office today (the 31st), the total industrial production index (seasonally adjusted, 2020=100) stood at 120.2, unchanged from the previous month.
Total industrial production declined for two consecutive months in April (-0.5%) and May (-0.4%), turned to a 2.4% increase in June, but showed flat movement in July.
Mining and manufacturing production rose by 0.2%.
While production decreased in sectors such as automobiles (-4.5%), it increased in electronic components (20.7%) and primary metals (4.2%).
Semiconductor production also saw a slight increase (0.5%).
Lee Doo-won, Director of the Economic Trends Statistics Division, stated, "Electronic component production surged significantly due to the launch of Samsung Electronics' new mobile phone models. In the case of automobiles, the base effect from the previous month's production increase, along with strikes at Hyundai Motor, appeared to act as partial downward factors."
The retail sales index (seasonally adjusted), which reflects goods consumption last month, fell 2.4% from the previous month.
After declining in April (-3.7%) and May (-0.1%), rising in June (2.7%), it turned downward again in July.
Sales decreased across durable goods such as passenger cars (-7.7%), semi-durable goods such as clothing (-1.4%), and non-durable goods such as cosmetics (-0.1%).
In particular, retail sales of passenger cars, which had surged due to the expiration of individual consumption tax cuts in the previous month, dropped by 11.1%.
This marks the largest decline since January 2024 (-14.6%).
For home appliances and communication devices, the base effect from a sharp surge in consumption during Samsung Electronics' home appliance promotional event the previous month is believed to have had an impact.
Service output, which indicates service consumption, also decreased by 1.3% compared to the previous month.
This is the steepest decline since February 2022 (-1.7%).
After rising in May (1.0%) and June (0.9%) following an April (-0.8%) drop, the upward trend lost momentum in July.
The decrease was particularly steep in finance and insurance (-4.8%).
Director Lee explained, "The decrease in stock trading and lower trading values in July had a major impact, with the financial and insurance sectors accounting for about -0.87 percentage points (p) of the 1.3% decline in the service sector."
Declines were also recorded in wholesale and retail (-1.1%), accommodations and food services (-1.1%), and arts, sports, and recreation (-3.2%).
Recent high inflation and heatwaves are believed to have played a role.
Conversely, facility investment increased by 7.5% from the previous month.
This marks the second consecutive month of growth following June (6.9%) and the largest increase since February (15.0%).
Investments grew across both transportation equipment (15.4%), led by other transportation equipment, and machinery (4.2%), such as semiconductor manufacturing machinery.
Director Lee explained, "The upward trend in semiconductor manufacturing equipment investment continued due to the expansion of memory semiconductor production capacity, and investments in aircraft and ships also increased this month."
The Index of Construction Completion (constant prices), which shows domestic construction companies' completed project performances, fell 1.1% from the previous month.
It shifted to a decrease following upward trends in May (3.3%) and June (4.2%).
The cyclical component of the coincident composite index, which reflects current economic conditions, rose 0.8p from the previous month.
The cyclical component of the leading composite index, which forecasts future economic trends, went up 0.4p.
(Photo: Yonhap News)
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