Current Economic Situation, April 2018

 

Production and Consumption Grow due to Strong Exports

 

 

The Korean economy continues to recover backed by strong exports.  Mining and manufacturing production, consumption and facility investment continued to rise.

 

The economy added 112,000 jobs year-on-year in March as manufacturing and construction continued to be strong and the service sector employment rebounded.  The young adult unemployment rate rose (11.3%→ 11.6%, y-o-y).

 

Consumer price inflation was 1.3 percent in March, rising even more slowly compared with 1.4 percent in the previous month, due to low agricultural product prices and public utility rates, as well as steady petroleum product prices.

 

Industrial production stayed flat in February (up 1.2%→ 0.0%, m-o-m).  Mining and manufacturing production increased for the second consecutive month (up 0.9%→ up 1.1%, m-o-m) due to strong automobiles and semiconductors.  Service output stayed flat (up 0.8%→ 0.0%, m-o-m) as transportation & storage services declined and meanwhile wholesale & retail and healthcare & social welfare services increased.

 

Retail sales increased in February (up 1.3%→ up 1.0%, m-o-m) backed by semi-durable goods, such as clothing, and nondurable goods, such as food.

 

Facility investment rose for the fourth consecutive month in February (up 5.4%→ up 1.3%, m-o-m) due to strong investment in transportation equipment.  Construction completed fell (up 8.1%→ down 3.8%, m-o-m), despite an increase in civil engineering works, due to a drop in building construction.

 

In February, the cyclical indicator of the coincident composite index rose 0.1 points from the previous month to 99.9, and the cyclical indicator of the leading composite index fell 0.2 points to 100.6.

 

Exports increased for the 17^th consecutive month in March (up 6.1%, y-o-y) backed by strong major export items, such as semiconductors, amid recovering global economies.

 

In March, KOSPI rose after fluctuating amid concerns over North related risks and the spread of protectionism, and the dollar-won exchange rate fell as concerns eased over North related risks.  Government bond yields fell, despite the Fed’s rate hike, due to rising concerns about trade conflicts between the US and China.

 

Housing prices increased at a slower rate in March (up 0.20%→ up 0.12%, m-o-m) as housing price growth slowed down in the Seoul metropolitan area.  Jeonse (lump-sum deposits with no monthly payments) prices continued to fall (down 0.09%→ down 0.13%, m-o-m) as the prices in Seoul’s southern districts slipped.

 

The economy is expected to stay on a recovery path backed by improving global economies.  However, unemployment has been rising and external risks linger, such as trade issues and Fed’s interest rate hikes.

 

The government will strengthen its risk management, and will continue to work to improve the job market as well as the real economy through the 2018 economic policies and its recent measures aimed at increasing young adult jobs and stimulating the local economy.

 

 

Key Statistics

 

 

Employment

 

	2015	2016			2017						2018
		Annual	Q3	Q4	Annual	Q1	Q2	Q3	Q4	Mar	Q1	Feb	Mar
Number of employed (million)	26.18	26.41	26.72	26.62	26.73	26.10	26.92	27.00	26.88	26.44	26.28	26.08	26.56
Employment rate (%)	60.5	60.6	61.2	60.9	60.8	59.6	61.3	61.4	61.0	60.3	59.6	59.2	60.2
(Seasonally adjusted)	60.5	60.6	60.6	60.7	60.8	60.9	60.8	60.8	60.9	61.0	60.9	60.7	60.9

 

 

Consumer Price Index

 

	2017										2018
	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar
y-o-y	2.2	1.9	2.0	1.9	2.2	2.6	2.1	1.8	1.3	1.5	1.0	1.4	1.3
m-o-m	0.0	-0.1	0.1	-0.1	0.2	0.6	0.1	-0.2	-0.7	0.3	0.4	0.8	-0.1

 

 

Mining and Manufacturing Production

            (q-o-q, m-o-m, %)

Mining and Manufacturing2			2016	2017					2018
			Annual	Annual¹	Q3	Q4¹	Dec	Feb	Jan¹	Feb¹
Mining		(q-o-q, m-o-m)	-	-	0.8	-1.0	-2.0	-3.0	0.9	1.1
		(y-o-y)	2.3	1.9	4.6	-3.8	-4.8	7.6	4.3	-6.4
Manufacturing	Production	(q-o-q, m-o-m)	-	-	0.6	-1.1	-2.5	-3.4	1.2	1.4
		(y-o-y)	2.4	1.6	4.6	-4.8	-6.2	8.0	3.7	-7.2
	Shipment -Domestic consumption -Exports		1.1 1.9 0.1	0.7 1.8 -0.4	0.9 0.9 1.3	-1.0 -1.1 -0.5	-3.8 -3.1 -4.1	-1.7 -1.1 -2.2	0.6 0.7 0.3	0.5 2.9 -3.5
	Inventory3		-1.6	8.8	0.1	2.9	1.2	1.1	0.7	1.1
	Average operation ratio		72.9	72.6	73.0	71.8	70.3	72.3	70.3	72.3
	Production capacity (y-o-y)		2.8	1.1	0.7	-0.1	-0.5	2.2	-0.1	0.2

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							2018
	Annual	Annual	Annual¹	Q1	Q2	Q3	Q4¹	Nov¹	Dec¹	Jan¹	Feb¹
Service activity index	2.9	2.6	1.9	0.7	0.5	0.9	0.2	1.4	-0.2	0.8	0.0

1. 1. Preliminary

 

 

Retail Sales

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

	2015	2016			2017						2018
	Annual	Annual	Q3	Q4	Annual¹	Q1	Q2	Q3	Q4¹	Dec¹	Jan¹	Feb¹
Retail sales	4.1	3.9	-1.6	1.4	1.9	0.4	1.0	0.2	0.9	-2.6	1.3	1.0
(y-o-y)	-	-	3.1	2.2	-	1.6	1.0	3.2	2.1	1.4	1.2	6.3

1. 1. Preliminary

 

 

Facility Investment Index

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

	2015	2016	2017							2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Nov	Dec	Jan¹	Feb¹
Facility investment index	6.9	-1.3	14.1	6.0	3.1	0.2	-1.7	2.5	6.0	5.4	1.3
y-o-y	-	-	-	18.2	17.8	20.6	2.0	6.7	2.5	21.6	9.7

1. 1. Preliminary

 

 

Construction Completed

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

	2015	2016	2017							2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Nov	Dec	Jan¹	Feb¹
Construction completed (constant)	5.0	15.4	10.1	4.3	-0.2	-0.3	-0.1	-2.4	1.4	8.1	-3.8
y-o-y	-	-	-	17.7	13.6	12.7	-0.5	0.6	-0.4	15.3	0.9

1. 1. Preliminary

 

 

Composite Index of Coincident and Leading Indicators

 

	2017						2018
	Jul	Aug	Sep	Oct	Nov	Dec¹	Jan¹	Feb¹
Cyclical indicator of coincident composite index	100.5	100.4	100.4	100.2	100.2	99.8	99.8	99.9
(m-o-m, %)	-0.1	-0.1	0.0	-0.2	0.0	-0.4	0.0	0.1
Cyclical indicator of leading composite index	101.2	101.1	100.9	100.8	100.7	100.7	100.8	100.6
(m-o-m, %)	0.2	-0.1	-0.2	-0.1	-0.1	0.0	0.1	-0.2

1. 1. Preliminary

 

 

Exports and Imports

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

	2015	2016	2017						2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Mar	Feb	Mar¹
Exports	526.76	495.43	573.69	132.06	147.04	151.05	143.54	48.64	44.86	51.58
(y-o-y)	-8.0	-5.9	15.8	14.6	16.7	24.0	8.4	13.1	3.9	6.1
Average daily exports	1.93	1.81	2.13	1.96	2.21	2.13	2.23	2.03	2.30	2.19
Imports	436.50	406.19	478.48	116.43	117.80	120.85	123.40	42.58	41.61	44.72
(y-o-y)	-16.9	-6.9	17.8	24.1	18.6	17.9	11.6	27.7	14.9	5.0
Average daily imports	1.60	1.49	1.78	1.72	1.77	1.70	1.91	1.77	2.13	1.90

1. Preliminary

 

Please refer to the attached PDF