In December of last year, the total industrial production in South Korea turned to an increase after four months. Investment in equipment and construction also rebounded. However, indicators related to 'consumption,' such as the production of services related to lodging and restaurants and retail sales, appear to have stagnated. This is interpreted as the aftermath of the 'Dec. 3 martial law incident.'
According to the 'December 2024 industrial activity trends' released by the Statistics Korea on the 3rd, the overall industrial production index (seasonally adjusted, excluding agriculture, forestry, and fishery) for December of last year was 115.2 (2020 = 100), a 2.3% increase compared to the previous month. Overall industrial production turned to an increase after four months following declines in September (-0.4%), October (-0.3%), and November (-0.3%).
The production in the mining and manufacturing sectors increased by 4.6% compared to the previous month, with all industries in the mining, manufacturing, and electricity and gas industries showing growth. Among these, manufacturing production showed strong performance in semiconductors and automobiles, increasing by 4.4% compared to the previous month. The inventory in manufacturing decreased by 3.6% from the previous month, and the manufacturing inventory turnover ratio (inventory ÷ shipment ratio) fell to 101.2%, a drop of 12.4 percentage points from the previous month. Although the overall inventory situation improved, differences were observed by industry, with inventory piling up in automobiles while decreasing in semiconductors and electronic components.
Service production increased by 1.7% compared to the previous month, rebounding due to growth in finance and insurance, wholesale and retail. However, lodging and restaurant services, which are closely related to consumption, plummeted by 3.1%, marking the largest decrease since February 2022 (-6.0%). The arts, sports, and leisure sectors also saw a decrease of 6.9%.
Retail sales, which indicate consumer spending trends, decreased by 0.6% compared to the previous month. Sales of durable goods, such as automobiles and home appliances, fell sharply, and sales of semi-durable goods, such as entertainment, hobbies, and sports equipment, were also sluggish. Only the consumption of non-durable goods, including cosmetics and pharmaceuticals, increased.
It appears that the 'Dec. 3 emergency martial law incident' and the tragic event involving Jeju Air on December 29 impacted these trends. Gong Mi-sook, the economic trends statistics advisor at Statistics Korea, noted, "Overall production in December recorded a 'plus,' but in contrast, the lodging and restaurant services within the service sector showed a 'minus,' and retail sales have yet to recover. It seems that there was an influence from the national mourning period and the political situation."
Investment in equipment increased by 9.9% compared to the previous month, driven by machinery and transport equipment. Construction performance, represented by construction work in progress, increased by 1.3% from the previous month due to improved results in building construction. Construction performance had recorded the longest decline over the past seven months from May to November last year, but it broke this trend in the last month due to support from the construction sector.
The coincident index of economic activity, which shows the current economy, stood at 97.6, remaining stable compared to the previous month. The leading index of economic activity, which forecasts future economic trends, dropped to 100.6, down by 0.2 percentage points from the previous month.