Despite the government's payment of people's livelihood recovery consumption coupons, consumption in August recorded a decline. As sales of food and beverages and home appliances fell, retail sales decreased 2.4% from the previous month. In August, not only consumption but also investment decreased, and total industry production was flat. This contrasts with July's "triple increase (simultaneous rise in production, consumption, and investment)."
According to the "August industrial activity trends" released by Statistics Korea on the 30th, last month's all-industry production index (seasonally adjusted, excluding agriculture, forestry, and fisheries) was 114.5 (2020=100), the same level as the previous month. While mining and manufacturing output increased, declines in services, construction, and public administration pulled the total to a flat reading from the previous month.
In mining and manufacturing, semiconductor output fell, but increases in automobiles and pharmaceuticals lifted overall production by 2.4%. Manufacturing inventories rose 0.6%, and the average operation rate climbed 2.2 percentage points to 74.7%.
Service-sector output, which reflects service consumption, fell 0.7% from the previous month. Output rose in professional, scientific, and technical fields, but declined in wholesale and retail, industry and professional associations, and the repair of motor vehicles and motorcycles. In particular, lower sales of home appliances, information and communications equipment, food and beverages, and tobacco had an impact.
Last month, consumption was sluggish despite the payment of consumption coupons. Although people's livelihood recovery consumption coupons were paid starting Jul. 21, August retail sales fell 2.4% from the previous month. Sales of semi-durable goods such as clothing increased 1.0% from the previous month, but sales of nondurable goods such as food and beverages (-3.9%) and durable goods such as home appliances (-1.6%) decreased.
Statistics Korea analyzed that the effect of the consumption coupons was concentrated on services such as dining out rather than on goods, and that a base effect from advance purchases in July affected some items. In particular, consumption of home appliances plunged 13.8% from the previous month, which it attributed to demand concentrating on the high-efficiency home appliance rebate program conducted in July. A decrease in apartment move-ins during the same period was also cited as a cause of weaker home appliance consumption.
Food and beverage consumption decreased 5.6% from the previous month. Statistics Korea explained, "As consumption coupons were used mainly for services such as dining out, purchases for home-cooked meals or ingredients decreased, and the postponement of Chuseok to October also had an effect." In fact, service sectors such as restaurants continued to increase in August.
Statistics Korea said that although consumption decreased in August, consumption could increase going forward. That is because consumer sentiment is improving and the second round of consumption coupons began to be paid from September. Statistics Korea projected, "The first round of consumption coupons was not exhausted 100%, and the payment of the second round of coupons and promotions by the retail industry could lead to higher consumption in September."
Facility investment fell 1.1% from the previous month. Construction completed (constant prices), which indicates construction performance, decreased 6.1% overall as both building (-6.8%) and civil engineering (-4.0%) declined.
However, business cycle indicators showed an improving trend. The coincident index cyclical component rose 0.2 point from the previous month to 99.2, and the leading index cyclical component was tallied at 102.0, up 0.5 point.