Current Economic Situation, February 2018

 

Production and Investment Rise while

Consumption Slows Down

 

 

The Korean economy continues to recover as all industry production and investment rose for the second consecutive month backed by strong exports.  However, consumption slowed down due to a base effect.

 

The economy added 253,000 jobs year-on-year in December 2017 as manufacturing and construction job growth improved, despite a slowdown in the service sector.  The youth unemployment rate increased (up 8.4%→ up 9.2%, y-o-y).

 

Consumer price inflation in January 2018 fell 0.5 percentage points from the previous month (up 1.5%→ up 1.0%, y-o-y).  The index rose 0.4 percent month-on-month due to a price hike in agricultural products.

 

All industry production in December increased for the second consecutive month (up 1.3%→ up 0.2%, m-o-m).  Mining and manufacturing production declined (up 0.2%→ down 0.5%, m-o-m) due to a slowdown in automobiles and mechanical equipment, and service output rose (up 2.5%→ up 0.2%, m-o-m) due to heavy trading in stocks and growth in R&D spending.

 

Retail sales fell in December (up 5.7%→ down 4.0%, m-o-m) as automobile sales declined due to a partial strike in the industry, as well as due to a base effect from the previous month when an early cold spell pushed up sales of winter clothes.

 

Facility investment rose for the second straight month in December (up 10.4%→ up 8.9%, m-o-m) due to increased imports in semiconductor manufacturing equipment.  Construction investment fell (down 2.4%→ down 0.3%, m-o-m) due to a slowdown in housing construction, although civil engineering works picked up as public investment in SOC projects increased.

 

In December, the cyclical indicator of the coincident composite index fell 0.3 points to 100.1, and the cyclical indicator of the leading composite index stayed unchanged from the previous month at 101.2.

 

Exports increased for the 15^th consecutive month in January (up 8.9%→ up 22.2%, y-o-y) due to strong major export items, such as semiconductors, and more days worked.

 

In January, KOSPI edged up due to strong global markets and foreign purchases of Korean shares, and the dollar-won exchange rate fell amid the weak dollar.  Government bond yields rose.

 

Housing prices continued to grow in January (up 0.11%→ up 0.14%, m-o-m) as the prices picked up in the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices fell (down 0.03%→ down 0.05%, m-o-m) due to increased supplies.

 

The economy is expected to stay on a recovery path amid improving global economies and strong exports.  However, the youth unemployment rate has increased, and internal and external risks linger, such as trade issues and major economies’ monetary policy normalization.

 

The government will strengthen its risk management, and will work to translate the current economic recovery into job creation and improvement in 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

 

	2017												2018
	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan
y-o-y	2.0	1.9	2.2	1.9	2.0	1.9	2.2	2.6	2.1	1.8	1.3	1.5	1.0
m-o-m	0.9	0.3	0.0	-0.1	0.1	-0.1	0.2	0.6	0.1	-0.2	-0.7	0.3	0.4

 

 

Mining and Manufacturing Production

            (q-o-q, m-o-m, %)

Mining and Manufacturing2			2016			2017
			Annual	Q4	Dec	Annual¹	Q4¹	Oct	Nov¹	Dec¹
Mining		(q-o-q, m-o-m)	-	0.6	-0.4	-	-1.4	-1.6	0.2	-0.5
		(y-o-y)	1.0	2.8	4.3	0.6	-4.6	-6.3	-1.7	-6.0
Manufacturing	Production	(q-o-q, m-o-m)	-	0.8	-0.4	-	-1.6	-2.0	0.2	-0.7
		(y-o-y)	1.0	2.9	4.4	0.5	-5.0	-6.5	-1.9	-6.6
	Shipment -Domestic consumption -Exports		0.6 1.3 -0.1	1.2 2.7 -0.4	0.4 0.4 0.5	0.3 0.0 0.6	-1.4 -2.0 -0.5	-1.8 -4.1 0.9	1.6 3.6 -0.4	-2.3 -2.2 -2.6
	Inventory3		-5.9	-3.2	-2.0	9.5	3.9	4.3	-1.7	1.3
	Average operation ratio		72.6	72.4	72.7	71.9	70.9	71.1	71.2	70.4
	Production capacity (y-o-y)		0.8	1.6	1.9	1.1	0.7	1.1	0.6	0.4

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	Q3	Q4	Annual¹	Q1	Q2	Q3	Q4¹	Nov¹	Dec¹
Service activity index	2.9	3.0	1.0	-0.3	2.0	0.9	0.6	1.4	0.4	2.5	0.2

1. 1. Preliminary

 

 

Retail Sales

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

	2015	2016			2017
	Annual	Annual	Q3	Q4	Annual¹	Q1	Q2	Q3	Q4¹	Oct	Nov¹	Dec¹
Retail sales	2.0	4.3	-1.2	2.1	2.7	-0.5	1.2	1.1	1.2	-2.9	5.7	-4.0
(y-o-y)	-	-	3.5	2.5	-	1.9	1.7	4.3	2.9	-0.2	6.5	2.2

1. 1. Preliminary

 

 

Facility Investment Index

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

	2015	2016			2017
	Annual	Annual	Q3	Q4	Annual¹	Q1	Q2	Q3	Q4¹	Nov¹	Dec¹
Facility investment index	6.9	-1.3	-1.9	8.0	14.1	5.6	4.4	-0.4	-3.1	10.4	8.9
y-o-y	-	-	-4.7	5.9	-	18.1	17.7	20.6	1.9	6.6	2.4

1. 1. Preliminary

 

 

Construction Completed

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

	2015	2016			2017
	Annual	Annual	Q3	Q4	Annual¹	Q1	Q2	Q3	Q4¹	Nov¹	Dec¹
Construction completed (constant)	5.0	15.4	4.2	4.1	10.0	5.9	-1.1	0.7	-2.4	-2.4	-0.3
y-o-y	-	-	14.5	17.7	-	17.9	13.6	13.4	-1.6	0.3	-2.9

1.  1. Preliminary

 

 

Composite Index of Coincident and Leading Indicators

 

	2017
	May	Jun	Jul	Aug	Sep	Oct	Nov¹	Dec¹
Cyclical indicator of coincident composite index	100.8	100.7	100.7	100.8	101.0	100.4	100.4	100.1
(m-o-m, %)	-0.2	-0.1	0.0	0.1	0.2	-0.6	0.0	-0.3
Cyclical indicator of leading composite index	101.2	101.6	101.7	101.8	101.6	101.3	101.2	101.2
(m-o-m, %)	0.2	0.4	0.1	0.1	-0.2	-0.3	-0.1	0.0

1. 1. Preliminary

 

 

Exports and Imports

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

	2015	2016	2017						2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Jan	Jan¹
Exports	526.76	495.43	573.72	132.06	147.05	151.06	143.55	40.26	49.21
(y-o-y)	-8.0	-5.9	15.8	14.7	16.7	24.0	8.5	11.0	22.2
Average daily exports	1.93	1.81	2.13	1.96	2.21	2.13	2.23	1.87	2.05
Imports	436.50	406.19	478.41	116.38	117.87	120.80	123.37	37.62	45.49
(y-o-y)	-16.9	-6.9	17.8	24.0	18.7	17.9	11.6	20.1	20.9
Average daily imports	1.60	1.49	1.78	1.72	1.77	1.70	1.91	1.75	1.90

1. Preliminary

 

Please refer to the attached PDF