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PRESS RELEASES

Current Economic Situation, September 2018

  • DivisionEconomic Policy Bureau - Economic Analysis Division
  • DateSeptember 14, 2018
  • Tel044-215-2733

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

 

Please refer to the attached PDF