Current Economic Situation, November 2018

 

Exports Continue to be Strong while

Investment and Employment Slow Down

 

 

The Korean economy had seen industrial activities slow down in September due to fewer days worked. The economy has been growing steadily backed by strong exports and consumption. However, investment and employment remain weak, and uncertainties are increasing amid trade conflicts between the US and China as well as rising oil prices.

 

The economy added 45,000 jobs year-on-year in September led by construction jobs. Manufacturing jobs and service jobs fell. Young adult unemployment declined (9.2%→ 8.8%, down 0.4%p, y-o-y).

 

Consumer prices rose at a faster rate in October (up 1.9% → up 2.0%, y-o-y, compared with a month ago) due to an increase in petroleum product prices as well as a base effect from a year ago when agricultural product prices stayed low.

 

All industry production fell in September (up 0.5%→ down 1.3%, m-o-m): Mining and manufacturing production fell (up 1.3%→ down 2.5%, m-o-m) due to a drop in automobiles and electronic parts. Service output stayed flat (0.0%→ 0.0%, m-o-m) as a decline in wholesale & retail was offset by an increase in financial & insurance services and real estate & renting.

 

Retail sales dropped in September (up 0.1%→ -2.2%, m-o-m): Sales of semi-durable goods rose 1.8 percent, but sales of durable goods and nondurable goods fell 7.6 percent and 1.1 percent, respectively.

 

Facility investment increased in September (down 1.6%→ up 2.9%, m-o-m), despite a drop in transportation equipment, as machinery investment rose. Construction completed fell (down 0.6%→ down 3.8%, m-o-m) as both building construction and civil engineering works declined.

 

In September, the cyclical indicator of the coincident composite index fell 0.3 points to 98.6, and the cyclical indicator of the leading composite index fell 0.2 points to 99.2.

 

Exports in October posted US $54.97 billion, the second highest level on record, backed by strong petroleum products, general machinery and petrochemicals. Average daily exports rose to the third highest level on record.

 

In October KOSPI fell amid continuing trade conflicts between the US and China and due to concerns over worsening fiscal soundness in Italy. The dollar-won exchange rate rose amid tumbling global stock markets as well as a weak yuan. Government bond yields fell.

 

Housing prices rose in October (up 0.31%→ up 0.19%, m-o-m) led by the Seoul metropolitan area. Jeonse (lump-sum deposits with no monthly payments) prices continued to fall (down 0.08%→ down 0.05%, m-o-m) led by areas outside the Seoul metropolitan area.

 

The economy is expected to continue to recover given improving global economies and strong exports, but job markets are weak and there are external risks, such as US-China trade conflicts, Fed’s rate hikes, high oil prices and financial market volatility.

 

The government will strengthen its risk management and boost the economy through fiscal spending, which will be focused on increasing support for low-income households and small merchants, as well as assisting job creation through policies to promote new technologies and industries.

 

 

Key Statistics

 

 

Employment

 

	2015	2016			2017						2018
		Annual	Q3	Q4	Annual	Q1	Q2	Q3	Q4	Sep	Q1	Q2	Q3	Sep
Number of employed (million)	26.18	26.41	26.72	26.62	26.73	26.10	26.92	27.00	26.88	27.01	26.28	27.02	27.02	27.06
Employment rate (%)	60.5	60.6	61.2	60.9	60.8	59.6	61.3	61.4	61.0	61.4	59.6	61.2	61.1	61.2
(Seasonally adjusted)	60.5	60.6	60.6	60.7	60.8	60.9	60.8	60.8	60.9	60.9	60.9	60.7	60.5	60.6

 

 

Consumer Price Index

 

	2017			2018
	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct
y-o-y	1.8	1.3	1.5	1.0	1.4	1.3	1.6	1.5	1.5	1.5	1.4	1.9	2.0
m-o-m	-0.2	-0.7	0.3	0.4	0.8	-0.1	0.1	0.1	-0.2	0.2	0.5	0.7	-0.2

 

 

Mining and Manufacturing Production

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

Mining and Manufacturing2			2017			2018
			Annual	Q3	Sep	Q2	Q3¹	Jul	Aug¹	Sep¹
Mining		(q-o-q, m-o-m)	-	0.8	0.3	2.7	0.7	0.6	1.3	-2.5
		(y-o-y)	1.9	4.6	10.0	0.7	-1.7	1.0	2.5	-8.4
Manufacturing	Production	(q-o-q, m-o-m)	-	0.6	0.6	3.0	0.4	0.1	1.6	-2.1
		(y-o-y)	1.6	4.6	10.6	0.5	-2.2	0.9	2.0	-8.9
	Shipment -Domestic consumption -Exports		0.7 1.4 -0.3	4.3 6.1 1.8	10.2 12.6 6.9	-0.8 -1.3 -0.1	-3.1 -5.2 -0.3	-0.8 -2.2 1.2	0.8 0.1 2.0	-9.0 -12.7 -3.9
	Inventory3		8.8	2.5	2.5	8.2	4.9	4.4	4.4	4.9
	Average operation ratio		72.6	73.0	72.7	73.2	74.3	73.2	75.7	73.9
	Production capacity (y-o-y)		1.1	0.7	0.6	-1.0	-1.5	-1.2	-1.5	-1.9

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	Q2	Q3¹	Aug¹	Sep¹
Service activity index	2.6	1.9	0.7	0.5	0.9	0.2	1.0	0.2	0.2	0.0	0.0

1. 1. Preliminary

 

 

Retail Sales

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

	2015	2016	2017					2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3¹	Aug¹	Sep¹
Retail sales	4.1	3.9	1.9	0.4	1.0	0.2	0.9	3.0	0.7	-0.5	0.1	-2.2
(y-o-y)	-	-	-	1.6	1.0	3.2	2.1	5.0	4.7	3.9	5.9	0.5

1. 1. Preliminary

    

    

Facility Investment Index

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

	2015	2016	2017					2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3¹	Aug¹	Sep¹
Facility investment index	6.9	-1.3	14.1	6.0	3.1	0.2	-1.7	8.4	-11.0	-6.2	-1.6	2.9
y-o-y	-	-	-	18.2	17.8	20.6	2.0	9.4	-5.9	-13.7	-11.3	-19.3

1. 1. Preliminary

 

 

Construction Completed

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

	2015	2016	2017					2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3¹	Aug¹	Sep¹
Construction completed (constant)	5.0	15.4	10.1	4.3	-0.2	-0.3	-0.1	2.5	-4.9	-4.3	-0.6	-3.8
y-o-y	-	-	-	17.7	13.6	12.7	-0.5	1.5	-3.4	-9.6	-5.4	-16.6

1. 1. Preliminary

 

 

Composite Index of Coincident and Leading Indicators

 

	2018
	Feb	Mar	Apr	May	Jun	Jul	Aug¹	Sep¹
Cyclical indicator of coincident composite index	99.8	99.8	99.7	99.6	99.4	99.1	98.9	98.6
(m-o-m, %)	0.0	0.0	-0.1	-0.1	-0.2	-0.3	-0.2	-0.3
Cyclical indicator of leading composite index	100.6	100.4	100.1	100.1	100.0	99.8	99.4	99.2
(m-o-m, %)	-0.2	-0.2	-0.3	0.0	-0.1	-0.2	-0.4	-0.2

1. 1. Preliminary

 

 

Exports and Imports

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

	2016	2017						2018
	Annual	Annual	Q1	Q2	Q3	Q4	Oct	Q1	Q2	Q3	Oct¹
Exports	495.43	573.69	132.06	147.04	151.05	143.54	44.79	145.07	151.66	153.58	54.97
(y-o-y)	-5.9	15.8	14.7	16.7	24.0	8.4	6.7	9.9	3.1	1.7	22.7
Average daily exports	1.81	2.13	1.96	2.21	2.13	2.23	2.49	2.17	2.30	2.28	2.39
Imports	406.19	478.48	116.43	117.80	120.85	123.40	37.86	132.37	132.99	130.32	48.42
(y-o-y)	-6.9	17.8	24.1	18.6	17.9	11.6	8.0	13.7	12.9	7.8	27.9
Average daily imports	1.49	1.78	1.72	1.77	1.70	1.91	2.10	1.98	2.02	1.93	2.11

1. Preliminary

 

Please refer to the attached PDF