Current Economic Situation, September 2018
Exports and Consumption Rise while Investment Declines
The Korean economy has stayed on its recovery path led by exports and consumption. However, investment slowed down while uncertainties are increasing amid trade conflicts between the US and China.
The economy added 3,000 jobs year-on-year in August. Job markets remained weak due to the struggling manufacturing and service sectors, despite an increase in construction. Young adult unemployment edged up (9.4% → 10.0%, up 0.6%p, y-o-y).
Consumer prices rose 1.4 percent year-on-year in August. Consumer prices stayed stable (up 1.5% → up 1.4%, y-o-y, compared with a month ago) due to the electricity rate cut, despite high agricultural product prices amid extremely hot weather.
All industry production rebounded in July (down 0.7% → up 0.5%, m-o-m) as mining and manufacturing production picked up (down 0.7% → up 0.4%, m-o-m) led by other transportation equipment, chemical products and mechanical equipment. Service output stayed flat (up 0.1% → 0.0%, m-o-m) as financial & insurance services dropped and meanwhile professional, scientific & technical services and publishing & communications services increased.
Retail sales rose in July (up 0.7% → up 0.5%, m-o-m) as the sales of nondurable goods, semi-durable goods and durable goods all increased.
Facility investment continued to decline in July (down 7.1% → down 0.6%, m-o-m), despite an increase in transportation equipment, due to a drop in machinery investment. Construction completed decreased (down 4.0% → down 0.1%, m-o-m), despite a rise in civil engineering works, as building construction continued to be weak.
In July, the cyclical indicator of the coincident composite index fell 0.3 points to 99.1, and the cyclical indicator of the leading composite index fell 0.2 points to 99.8.
Exports in August rose to an all-time high for the month of August due to strong petroleum products, semiconductors and steel. The daily average exports increased for the fourth consecutive month.
In August, KOSPI rose, despite continuing trade conflicts between the US and China, due to high expectations for easing regulations in the healthcare biotechnology sector. The dollar-won exchange rate fell, despite financial market volatility in emerging economies, as the US and Mexico reached a preliminary agreement to reform NAFTA. Government bond yields fell.
Housing prices increased in August (down 0.02% → up 0.02%, m-o-m) led by the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices continued to decline (down 0.21% → down 0.20%, m-o-m).
The economy is expected to continue to recover given improving global economies and strong exports, but job markets remain weak and external risks linger, such as US-China trade conflicts, Fed’s rate hikes and high oil prices.
The government will strengthen its risk management, and will work to help boost the economy through increased fiscal spending, while successfully carrying out the measures to support low-income households, small merchants and the self-employed, as well as helping to create jobs through ‘innovative growth’ policies.
Key Statistics
Employment
|
2015
|
2016
|
2017
|
2018
|
Annual
|
Q3
|
Q4
|
Annual
|
Q1
|
Q2
|
Q3
|
Q4
|
Aug
|
Q1
|
Q2
|
Jul
|
Aug
|
Number of employed (million)
|
26.18
|
26.41
|
26.72
|
26.62
|
26.73
|
26.10
|
26.92
|
27.00
|
26.88
|
26.90
|
26.28
|
27.02
|
27.08
|
26.91
|
Employment rate (%)
|
60.5
|
60.6
|
61.2
|
60.9
|
60.8
|
59.6
|
61.3
|
61.4
|
61.0
|
61.2
|
59.6
|
61.2
|
61.3
|
60.9
|
(Seasonally adjusted)
|
60.5
|
60.6
|
60.6
|
60.7
|
60.8
|
60.9
|
60.8
|
60.8
|
60.9
|
60.8
|
60.9
|
60.7
|
60.5
|
60.4
|
Consumer Price Index
|
2017
|
2018
|
Aug
|
Sep
|
Oct
|
Nov
|
Dec
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
y-o-y
|
2.6
|
2.1
|
1.8
|
1.3
|
1.5
|
1.0
|
1.4
|
1.3
|
1.6
|
1.5
|
1.5
|
1.5
|
1.4
|
m-o-m
|
0.6
|
0.1
|
-0.2
|
-0.7
|
0.3
|
0.4
|
0.8
|
-0.1
|
0.1
|
0.1
|
-0.2
|
0.2
|
0.5
|
Mining and Manufacturing Production
(q-o-q, m-o-m, %)
Mining and Manufacturing2
|
2017
|
2018
|
Annual
|
Q2
|
Jul
|
Q1
|
Q2¹
|
May
|
Jun¹
|
Jul¹
|
Mining
|
(q-o-q, m-o-m)
|
-
|
-1.0
|
1.1
|
-1.2
|
2.7
|
1.3
|
-0.7
|
0.4
|
(y-o-y)
|
1.9
|
2.2
|
1.6
|
-2.2
|
0.7
|
1.2
|
-0.4
|
0.9
|
Manufacturing
|
Production
|
(q-o-q, m-o-m)
|
-
|
-1.2
|
0.6
|
-1.3
|
3.0
|
1.5
|
-1.0
|
0.1
|
(y-o-y)
|
1.6
|
1.9
|
0.8
|
-2.8
|
0.5
|
1.2
|
-0.7
|
0.8
|
Shipment
-Domestic consumption
-Exports
|
0.7
1.4
-0.3
|
0.7
1.8
-1.0
|
0.7
2.3
-1.5
|
-3.8
-3.0
-5.0
|
-0.8
-1.3
-0.1
|
1.3
0.7
1.9
|
-2.1
-3.8
0.4
|
-0.9
-2.3
1.1
|
Inventory3
|
8.8
|
0.1
|
1.6
|
10.5
|
8.2
|
5.4
|
8.2
|
4.8
|
Average operation ratio
|
72.6
|
72.0
|
72.7
|
71.0
|
73.3
|
74.0
|
73.4
|
74.3
|
Production capacity
(y-o-y)
|
1.1
|
1.7
|
0.9
|
-0.3
|
-1.0
|
-1.0
|
-1.1
|
-1.3
|
- 1. Preliminary
- 2. Including mining, manufacturing, electricity and gas industry
- 3. End-period
Service Output
(q-o-q, m-o-m, %)
|
2016
|
2017
|
2018
|
Annual
|
Annual
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2¹
|
May
|
Jun¹
|
Jul¹
|
Service
activity index
|
2.6
|
1.9
|
0.7
|
0.5
|
0.9
|
0.2
|
1.0
|
0.2
|
-0.2
|
0.1
|
0.0
|
- 1. Preliminary
Retail Sales
(q-o-q, m-o-m, %)
|
2015
|
2016
|
2017
|
2018
|
Annual
|
Annual
|
Q4
|
Annual
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2¹
|
Jun¹
|
Jul¹
|
Retail sales
|
4.1
|
3.9
|
1.4
|
1.9
|
0.4
|
1.0
|
0.2
|
0.9
|
3.0
|
0.7
|
0.7
|
0.5
|
(y-o-y)
|
-
|
-
|
2.2
|
-
|
1.6
|
1.0
|
3.2
|
2.1
|
5.0
|
4.7
|
4.1
|
6.0
|
- 1. Preliminary
Facility Investment Index
(q-o-q, m-o-m, %)
|
2015
|
2016
|
2017
|
2018
|
Annual
|
Annual
|
Annual
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2¹
|
May
|
Jun¹
|
Jul¹
|
Facility investment index
|
6.9
|
-1.3
|
14.1
|
6.0
|
3.1
|
0.2
|
-1.7
|
8.4
|
-11.0
|
-2.8
|
-7.1
|
-0.6
|
y-o-y
|
-
|
-
|
-
|
18.2
|
17.8
|
20.6
|
2.0
|
9.4
|
-5.9
|
-3.5
|
-14.7
|
-10.4
|
- 1. Preliminary
Construction Completed
(q-o-q, m-o-m, %)
|
2015
|
2016
|
2017
|
2018
|
Annual
|
Annual
|
Annual
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2¹
|
May
|
Jun¹
|
Jul¹
|
Construction completed (constant)
|
5.0
|
15.4
|
10.1
|
4.3
|
-0.2
|
-0.3
|
-0.1
|
2.5
|
-5.0
|
-2.0
|
-4.0
|
-0.1
|
y-o-y
|
-
|
-
|
-
|
17.7
|
13.6
|
12.7
|
-0.5
|
1.5
|
-3.5
|
-2.5
|
-6.3
|
-7.0
|
- 1. Preliminary
Composite Index of Coincident and Leading Indicators
|
2017
|
2018
|
Dec
|
Jan
|
Feb
|
Mar
|
Apr
|
May¹
|
Jun¹
|
Jul¹
|
Cyclical indicator of coincident composite index
|
99.8
|
99.8
|
99.8
|
99.8
|
99.7
|
99.6
|
99.4
|
99.1
|
(m-o-m, %)
|
-0.4
|
0.0
|
0.0
|
0.0
|
-0.1
|
-0.1
|
-0.2
|
-0.3
|
Cyclical indicator of leading composite index
|
100.7
|
100.8
|
100.6
|
100.4
|
100.1
|
100.1
|
100.0
|
99.8
|
(m-o-m, %)
|
0.0
|
0.1
|
-0.2
|
-0.2
|
-0.3
|
0.0
|
-0.1
|
-0.2
|
- 1. Preliminary
Exports and Imports
(US$ billion, y-o-y, %)
|
2015
|
2016
|
2017
|
2018
|
Annual
|
Annual
|
Annual
|
Q1
|
Q2
|
Q3
|
Q4
|
Aug
|
Q1
|
Q2
|
Jul
|
Aug¹
|
Exports
|
526.76
|
495.43
|
573.69
|
132.06
|
147.04
|
151.05
|
143.54
|
47.11
|
145.08
|
151.70
|
51.85
|
51.20
|
(y-o-y)
|
-8.0
|
-5.9
|
15.8
|
14.7
|
16.7
|
24.0
|
8.4
|
17.4
|
9.9
|
3.2
|
6.2
|
8.7
|
Average daily exports
|
1.93
|
1.81
|
2.13
|
1.96
|
2.21
|
2.13
|
2.23
|
1.96
|
2.17
|
2.30
|
2.16
|
2.13
|
Imports
|
436.50
|
406.19
|
478.48
|
116.43
|
117.80
|
120.85
|
123.40
|
40.55
|
132.33
|
132.88
|
44.94
|
44.30
|
(y-o-y)
|
-16.9
|
-6.9
|
17.8
|
24.1
|
18.6
|
17.9
|
11.6
|
15.5
|
13.7
|
12.8
|
16.4
|
9.2
|
Average daily imports
|
1.60
|
1.49
|
1.78
|
1.72
|
1.77
|
1.70
|
1.91
|
1.69
|
1.98
|
2.01
|
1.87
|
1.85
|
- 1. Preliminary
Please refer to the attached PDF