The government has recently diagnosed that the economy is facing triple difficulties, including delays in the recovery of construction investment, employment difficulties, and exports, but there are signs that encourage expectations for economic recovery, such as an increase in consumption.
The Ministry of Economy and Finance noted in its report on the recent economic trends for August 2025 released on the 14th that "consumption has shifted to an increasing trend due to policy effects," adding that "positive signs are also emerging for future economic recovery."
It also emphasized that "we will focus the government's capabilities to swiftly implement the supplementary budget and ensure that the people's livelihood recovery consumption coupons can serve as a catalyst for revitalizing consumption and the local economy," and said, "We will devote all our efforts to responding to trade risks, including support for damage suffered by our corporations due to U.S. tariffs."
This economic diagnosis is the third by the Lee Jae-myung government. The first diagnosis in June noted, "Downward pressure on the economy remains," and last month indicated, "Although downward pressure persists, positive signs such as improvements in consumer sentiment are noticeable." This month's diagnosis is similar to last month's.
Director Jo Seong-jung of the Ministry of Economy and Finance explained, "Last month's diagnosis referred to 'downward economic pressure due to concerns about export slowdowns; (recently), although the export slowdown persists, the upward and downward factors are similar.' This month, we removed the term 'downward pressure.'"
Looking at the major indicators of industrial activity trends, production in the mining and manufacturing sectors, service sector production, retail sales, and construction investment increased, while facility investment decreased. Specifically, mining and manufacturing production rose by 1.6% compared to the previous month, while service and construction sector productions increased by 0.5% and 6.7% during the same period, respectively. As a result, total industrial production grew by 1.2% compared to the previous month.
Director Jo stated, "New orders are a leading indicator that can indicate the construction market's condition; last year, we saw an increase in new orders," and said, "If it goes well, we expect to see a decrease in the construction production decline starting in the second half of this year."
In contrast, facility investment decreased by 3.7%. The facility investment index increased for machinery (1.7%), but decreased for transport equipment (-14.8%), resulting in a 3.7% decline compared to the previous month.
In July, exports and imports increased by 5.9% compared to the previous year due to favorable semiconductor conditions. The average daily export amount was $2.43 billion, up 5.9% from the same month last year. Among the 15 key export items, semiconductors and automobiles increased, while petroleum products and chemicals decreased.
Retail sales, which indicate consumption trends, increased by 0.5%. The consumer sentiment index rose to 110.8 in July, up 2.1 points from the previous month. The consumer sentiment index has continued to rise since surpassing 100 (101.8) in May. A value above 100 means that consumers perceive the economic situation optimistically.
The job market experienced a breeze in July. The number of employed persons was 29,029,000, which is an increase of 171,000 compared to the same month last year. The employment rate for those aged 15 and older was 63.4%, marking a record high. The number of unemployed persons in July was 726,000, down by 11,000 compared to the same month last year. Consequently, the unemployment rate has fallen by 0.1 percentage points to 2.4%.
Although prices are still rising, the rate of increase has diminished. Prices increased by 2.2% in June compared to the same month last year, but rose by only 2.1% last month. The rise in processed food prices slowed, and petroleum products reversed to a decline. Core inflation, excluding food and energy, rose by 2.0%.
In June, the nationwide dwelling sales price rose by 0.14% compared to the previous month. Although prices dropped by 0.09% in the provinces, the metropolitan area saw an increase of 0.037%. The jeonse price also rose by 0.03% during the same period.