Seoul: South Korea's industrial production and facility investment took a downturn in May compared to the previous month, while retail sales saw no change, according to data released on Monday. Industrial production decreased by 1.1 percent on a month-to-month basis, continuing a downward trajectory for the second consecutive month, as reported by Statistics Korea.
According to Yonhap News Agency, facility investment also saw a decline, dropping 4.7 percent from the previous month, marking the third consecutive month of decline. Meanwhile, retail sales, a crucial measure of private spending, remained unchanged from April to May. This stagnation in retail activity highlights the ongoing fragility of South Korea's economic recovery.
The decline in industrial output was primarily attributed to a 2.9 percent reduction in the mining and manufacturing sectors, which are vital components of the economy. In the manufacturing sector, basic metals experienced a modest 1.5 percent increase in production. However, this was overshadowed by significant declines in the pharmaceuticals and fabricated metal products sectors, which fell by 10.4 percent and 6.9 percent, respectively. Automobile production also dropped by 2 percent, marking its second consecutive month of decline, partly due to U.S. tariff measures and increased U.S. production by South Korean automakers. On an annual basis, overall industrial output in May decreased by 0.8 percent.
Retail sales underperformed across various sectors, failing to rebound for the third consecutive month despite the implementation of the first supplementary budget in May. "The effects of the first supplementary budget may appear with a time lag in sectors such as public administration, construction, manufacturing, and services," said Choi Chang-yoon, an official from the agency. Sales of durable goods, such as home appliances, rose by 1.2 percent, but this was counterbalanced by a 0.7 percent decline in non-durable goods, including cosmetics. Compared to the same month last year, retail sales dipped by 0.2 percent.
Facility investment weakened across most sectors except for transportation equipment, which edged up by 0.1 percent on a monthly basis. Construction investment remained sluggish, with construction orders falling by 3.9 percent from the previous month, marking the 11th consecutive month of decline. "The main industrial activity indicators generally remained on a downward trend from the previous month, as domestic demand continues to face pressure amid heightened external uncertainties," stated the Ministry of Economy and Finance. The ministry also noted its intention to expedite the execution of the second supplementary budget to boost domestic demand and stabilize livelihoods.