Current Economic Situation, January 2018

 

Exports Continue to Rise while

Production and Consumption Rebound

 

 

The Korean economy continued to recover as production, consumption and facility investment rebounded due to base effects.  Exports continued to be strong as well.

 

The economy added 253,000 jobs year-on-year in December 2017, the same level as the previous month.  Employment improved in manufacturing and construction, but slowed in services.  In 2017, the economy added 320,000 jobs.

 

Consumer price inflation in December rose 0.2 percentage points from the previous month (up 1.3%→ up 1.5%, y-o-y) due to an easing effect of electricity rate cut from the same month of the previous year.  In 2017, consumer prices rose 1.9 percent.

 

Mining and manufacturing production edged up in November (down 1.5%→ up 0.2%, m-o-m) backed by strong automobile and machinery production, and service output rebounded (down 1.9%→ up 2.5%, m-o-m) due to the release of new smartphones and a rise in stock transactions.

 

Retail sales soared in November (down 2.9%→ up 5.6%, m-o-m) due to the release of new automobile and smartphone models, as well as high demand for winter clothing amid cold weather.

 

Facility investment rebounded in November (down 14.8%→ up 10.1%, m-o-m) due to a low base effect from the previous month and increased investment in semiconductor manufacturing equipment.  Construction investment edged down (up 0.6%→ down 3.8%, m-o-m) as civil engineering works and plant construction fell and housing construction orders slowed.

 

In November, the cyclical indicator of the coincident composite index stayed unchanged from the previous month at 100.4, and the cyclical indicator of the leading composite index dropped 0.1 points to 101.2.

 

Exports increased for the 14^th consecutive month in December (up 9.5%→ up 8.9%, y-o-y) backed by strong major export items, such as semiconductors, petroleum products and petrochemicals.  Exports rose to a record high in 2017.

 

In December, KOSPI declined on profit taking, and the dollar-won exchange rate fell amid the weak dollar.  Short-term government bond yields rose.

 

Housing prices grew in December (up 0.13%→ up 0.11%, m-o-m) as the price growth continued in the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices fell (up 0.05%→ down 0.03%, m-o-m) due to seasonal factors.

 

The economy is expected to stay on a recovery path backed by improving global economies and strong exports.  However, internal and external risks linger, such as a slowdown in the service sector employment, trade issues and auto worker strikes.

 

The government will strengthen its risk management, and will work to achieve tangible outcomes in creating jobs and improving the real economy by successfully implementing the 2018 economic policies.

 

 

Key Statistics

 

 

Employment

 

	2014	2015	2016				2017
			Annual	Q3	Q4	Dec	Annual	Q1	Q2	Q3	Q4	Nov	Dec
Number of employed (million)	25.60	25.94	26.24	26.55	26.45	26.17	26.55	25.92	26.75	26.83	26.70	26.85	26.42
Employment rate (%)	60.2	60.6	60.4	61.1	60.7	60.1	60.7	59.4	61.2	61.3	60.9	61.2	60.2
(Seasonally adjusted)	60.2	60.3	60.4	60.5	60.6	60.9	60.7	60.8	60.6	60.6	60.8	60.7	60.9

 

 

Consumer Price Index

 

	2016	2017
	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
y-o-y	1.3	2.0	1.9	2.2	1.9	2.0	1.9	2.2	2.6	2.1	1.8	1.3	1.5
m-o-m	0.1	0.9	0.3	0.0	-0.1	0.1	-0.1	0.2	0.6	0.1	-0.2	-0.7	0.3

 

 

Mining and Manufacturing Production

            (q-o-q, m-o-m, %)

Mining and Manufacturing2			2016			2017
			Annual	Q3	Nov	Q2	Q3	Sep	Oct¹	Nov¹
Mining		(q-o-q, m-o-m)	-	0.1	3.1	-2.3	1.6	0.4	-1.5	0.2
		(y-o-y)	1.0	0.5	5.4	0.5	3.6	8.7	-6.1	-1.6
Manufacturing	Production	(q-o-q, m-o-m)	-	0.1	3.1	-2.5	1.6	0.5	-1.8	0.1
		(y-o-y)	1.0	0.6	5.6	0.4	3.6	8.9	-6.3	-1.8
	Shipment -Domestic consumption -Exports		0.6 1.3 -0.1	-0.5 -0.3 -0.8	2.9 4.5 0.8	-2.0 -2.1 -1.7	1.9 1.3 2.6	0.1 0.5 -0.3	-1.7 -4.0 0.9	1.7 3.0 0.3
	Inventory3		-5.9	-3.2	-1.1	1.9	0.8	-2.1	4.3	-1.7
	Average operation ratio		72.6	71.9	73.7	71.5	72.4	72.0	71.3	71.3
	Production capacity (y-o-y)		0.8	1.0	1.7	0.9	0.9	1.1	1.1	0.5

1. 1. Preliminary
2. 2. Including mining, manufacturing, electricity and gas industry
3. 3. End-period

 

 

Service Output

(q-o-q, m-o-m, %)

	2015	2016					2017
	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3¹	Oct¹	Nov¹
Service activity index	2.9	3.0	0.2	1.1	1.0	-0.3	0.9	0.6	1.4	-1.9	2.5

1. 1. Preliminary

 

 

Retail Sales

(q-o-q, m-o-m, %)

	2015	2016					2017
	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3¹	Oct¹	Nov¹
Retail sales	-	4.3	-0.2	2.0	-1.2	2.1	-0.5	1.2	1.1	-2.9	5.6
(y-o-y)	2.0	-	5.0	5.9	3.5	2.5	1.9	1.7	4.3	-0.2	6.5

1. 1. Preliminary

 

 

Facility Investment Index

(q-o-q, m-o-m, %)

	2015	2016					2017
	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Oct¹	Nov¹
Facility investment index	6.9	-1.3	-6.5	5.1	-1.9	8.0	5.6	4.4	-0.4	-14.8	10.1
y-o-y	-	-	-7.6	0.6	-4.7	5.9	18.1	17.7	20.6	-3.8	6.3

1. 1. Preliminary

 

 

Construction Completed

(q-o-q, m-o-m, %)

	2015	2016					2017
	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3¹	Oct¹	Nov¹
Construction completed (constant)	5.0	15.4	6.2	2.3	4.2	4.1	5.9	-1.1	0.7	0.6	-3.8
y-o-y	-	-	13.2	15.8	14.5	17.7	17.9	13.6	13.4	-1.8	-1.0

1.  1. Preliminary

 

 

Composite Index of Coincident and Leading Indicators

 

	2017
	Apr	May	Jun	Jul	Aug	Sep	Oct¹	Nov¹
Cyclical indicator of coincident composite index	101.0	100.8	100.7	100.7	100.8	101.0	100.4	100.4
(m-o-m, %)	0.0	-0.2	-0.1	0.0	0.1	0.2	-0.6	0.0
Cyclical indicator of leading composite index	101.0	101.2	101.6	101.7	101.8	101.6	101.3	101.2
(m-o-m, %)	0.2	0.2	0.4	0.1	0.1	-0.2	-0.3	-0.1

1. 1. Preliminary

 

 

Exports and Imports

(US$ billion, y-o-y, %)

	2015	2016				2017
	Annual	Annual	Q3	Q4	Dec	Annual	Q1	Q2	Q3	Q4	Nov	Dec¹
Exports	526.76	495.43	121.85	132.36	45.07	573.87	132.10	147.20	151.04	143.67	49.62	49.07
(y-o-y)	-8.0	-5.9	-5.0	1.8	6.3	15.8	14.7	16.8	24.0	8.6	9.5	8.9
Average daily exports	1.93	1.81	1.78	1.86	2.18	2.13	1.96	2.21	2.13	2.23	2.07	2.18
Imports	436.50	406.19	102.46	110.59	38.30	478.09	116.25	117.34	120.71	123.10	41.99	43.29
(y-o-y)	-16.9	-6.9	-5.1	4.1	8.0	17.7	23.9	18.2	17.8	11.3	12.7	13.0
Average daily imports	1.60	1.49	1.50	1.56	1.56	1.77	1.72	1.76	1.70	1.91	1.75	1.92

1. Preliminary

 

Please refer to the attached PDF