Korea Development Institute (KDI) on the 7th, in its "Economic trends September issue," assessed that "despite the recent economic improvement, the real wage growth rate has remained in the 0% range, restraining a recovery in consumption." This is a more pessimistic assessment of consumption indicators than when it released last month's report.
KDI said, "Korea's economy, aided by expanded investment in artificial intelligence (AI) infrastructure, has seen exports and facility investment continue at a high pace of increase, while production in related institutional sectors such as metal processing, electrical equipment, and machinery equipment is showing a relatively solid trend." In July, all-industry production rose 3.1% from a year earlier. Although the growth rate (4.4%) slowed from June, it exceeded the second-quarter average (2.9%).
However, KDI assessed that "as the economic improvement has not sufficiently spread to household-wide income, the pace of consumption improvement is moderate." Last month, it noted, "Consumption also saw an expanded increase, centered on durable goods." The retail sales index in July fell 0.8% from the same month a year earlier. It had risen 3.9% in June before turning to a decline.
KDI said, "A decline in consumption of durable goods, passenger cars, home appliances, telecommunications devices, and computers led the overall drop in retail sales." It added, "On average for June–July, retail sales increased 1.5%, but this is below the first-quarter average (3.2%)," and "With the real wage growth rate for all workers in the first half staying at 0.3%, the recovery of household purchasing power is limited, delaying the improvement in consumption."
KDI also said the recovery in youth employment is slow. The number of employed persons in July was 108,000, with the increase expanding from the previous month (63,000). KDI said, "The increase in the number of employed persons still remained at a low level."