In September, as production and consumption increased side by side, they succeeded in rebounding for the first time in three months. As more outside activities increased due to the easing of social distancing, production in the lodging and restaurant industries increased by more than 10%, leading to an increase in overall industrial production. However, facility investment showed a decline for the second month in a row.
Simultaneous rise in production and consumption for the first time in three months
According to the ‘September Industrial Activity Trend’ released by the National Statistical Office on the 29th, the index of all industrial production (excluding seasonal adjustment and agriculture, forestry and fishery) in September was 113.1 (2015 = 100), up 1.3% from the previous month. All industrial production declined for two consecutive months from 1.6% in June to -0.7% in July and -0.2% in August, then turned to increase in September.
By industry, service industry production increased by 1.3%. In particular, the production of restaurants, pubs, and beverages increased by the easing of restrictions on private gatherings and the payment of national subsidies. This is the first rebound in three months since last June (2.5%), and the increase is the largest in seven months since February of this year (20.8%). Production in the wholesale and retail industry (0.7%), a representative face-to-face industry, also increased, and production in the transportation and warehousing industry (4.5%) also increased due to an increase in imports and exports and expansion of vaccinations.
On the other hand, the mining industry fell 0.8%, the second consecutive month of decline. Manufacturing production, which accounts for a large portion of mining and industrial production, fell 0.9%. In particular, automobile production decreased by 9.8% due to production adjustments due to disruptions in supply and demand for automotive semiconductors, and production of electrical equipment (-5.2%) also decreased.
The retail sales index (seasonally adjusted), which shows consumption trends, was 121.4 (2015 = 100), up 2.5% from the previous month. The retail sales index also recorded -0.8% in August, from 1.4% in June to -0.5% in July, showing negative (-) for the second month in a row, and increasing for the first time in three months. The increase is the largest in six months since March of this year (2.5%). Sales of non-durable goods such as cosmetics (3.8%) and semi-durable goods (5.1%) including clothes increased. However, sales of durable goods (-1.7%) such as passenger cars decreased.
Facility investment fell 1.0%, recording the second straight month of decline.
The cyclical change in the coincident index representing the current economy was 101.2, the same as the previous month. The cyclical change in the leading index, which predicts the future economy, was recorded at 102.1, down 0.3 points.
◆Hong Nam-ki “laying a foothold for a rebound in consumption in the fourth quarter”
Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki said in a Facebook post on the same day, “Despite difficult conditions such as the fourth spread of Corona 19, industrial activity in September showed improvement compared to August, with production of all industries increasing by more than 1%.” . He emphasized, “The resumption of consumption recovery in September, the last month of the quarter, can be seen as laying the foundation for a rebound in consumption in the fourth quarter.”
Deputy Prime Minister Hong said, “The warm weather and favorable consumption conditions such as the Chuseok holiday may have contributed to the domestic demand rebound as the vaccination progress and policy effects faster than any other country in the world led to an improvement in consumer sentiment.” However, the reason for the 0.8% and 1.0% declines in production and facility investment in the mining industry compared to the previous month was partly due to a decrease in automobile production and transportation equipment investment due to the base effect, disruptions in the supply and demand of semiconductors for vehicles, and the Chuseok holiday.
“Now, the economic flow in the remaining 4 quarters will determine the economic performance of this year,” he said. . He also predicted, “The recently announced transition to the quarantine system following the gradual recovery of daily life will also greatly contribute to the recovery of domestic demand such as the face-to-face service industry.”
Deputy Prime Minister Hong said, “However, we cannot be vigilant because uncertainties such as the possibility of slowing recovery in major countries and disruptions in global supply are everywhere. ” he said.
At the policy review meeting and the Korean version of the New Deal review meeting on the same day, 1st Vice Minister of Strategy and Finance Lee Won Lee said, “In particular, the improvement of indicators related to domestic demand was remarkable.” It is evaluated that the improvement in psychology has had a positive effect on the recovery of domestic demand,” he said. He continued, “The economic flow for the remaining period until the end of the year not only determines the economic performance of this year, but is also very important in that it is the starting point for our economy next year.” We will take all-out measures to restore the people’s livelihood economy,” he said.
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