Current Economic Situation, January 2019

 

Consumption Continues to Improve,

Investment and Employment Being Weak

 

 

Retail sales improved for the second consecutive month in November, however industrial activities fell.  Investment and employment remain weak, and concerns have been rising over a pessimistic outlook for semiconductor manufacturing.  External uncertainties linger amid ongoing trade conflicts between the US and China. 

 

The economy added 34,000 jobs year-on-year in December as job growth slowed in services and construction.  Manufacturing jobs continued to fall.  Young adult unemployment declined in December (9.2%→8.6%, y-o-y), posting an increase of 97,000 persons in 2018.

 

Consumer price inflation slowed in December (up 2.0% → up 1.3%, y-o-y) as oil product prices fell and fresh food prices became stable.  Consumer prices rose 1.5 percent in 2018.

 

All industry production fell in November (up 0.8%→ down 0.7%, m-o-m):  Mining and manufacturing production decreased (up 1.3%→ down 1.7%, m-o-m) due to weak manufacturing and gas & electricity production.  Service output declined (up 0.6%→ down 0.2%, m-o-m), as financial & insurance services, as well as real estate & renting, fell.  Wholesale & retail improved.

 

Retail sales continued to increase in November (up 0.2%→ up 0.5%, m-o-m) backed by strong durable goods sales.  Sales of durable goods and nondurable goods increased 3.3 percent and 1.1 percent, respectively.  Semi-durable goods sales dropped 3.8 percent.

 

Facility investment fell in November (up 2.2%→down 5.1%, m-o-m) as both machinery and transportation equipment declined.  Construction completed continued to fall (down 1.8%→ down 0.9%, m-o-m) due to weak building construction.

 

In November, the cyclical indicator of the coincident composite index fell 0.2 points to 98.2, and the cyclical indicator of the leading composite index fell 0.2 points to 98.6.

 

Exports fell in December (up 4.1%→down 1.2%, y-o-y), despite strong cars and vessels, as home electronics and smartphones decreased.  Annual exports surpassed US $600 billion in 2018 for the first time.

 

In December KOSPI fell amid growing uncertainties about the Chinese economy.  The dollar-won exchange rate fell on expectations that Fed might slow down its rate hike.  Government bond yields went down.

 

Housing prices went down in December (up 0.13%→ down 0.01%, m-o-m) due to falling prices in areas outside the Seoul metropolitan area.  Jeonse (lump-sum deposits with no monthly payments) prices continued to fall (down 0.09%→ down 0.19%, m-o-m) as the prices declined in both the Seoul metropolitan area and other areas.

 

The economy is expected to improve given expansionary fiscal policies and strong consumption, but job markets are weak and there are external uncertainties, such as those regarding US-China trade conflicts, Fed’s rate hikes and volatility in global financial markets.

 

The government will strengthen its risk management and work to boost the economy by implementing the measures to achieve industrial innovation, create jobs and support low-income households and small merchants.  The government will work to fast implement the 2019 economic policies, which have drawn to help achieve an inclusive and dynamic economy.

 

 

Key Statistics

 

 

Employment

 

	2015	2016	2017				2018
			Annual	Q3	Q4	Dec	Annual	Q1	Q2	Q3	Q4	Nov	Dec
Number of employed (million)	26.18	26.41	26.73	27.00	26.88	26.60	26.82	26.28	27.02	27.02	26.97	27.18	26,64
Employment rate (%)	60.5	60.6	60.8	61.4	61.0	60.4	60.7	59.6	61.2	61.1	60.9	61.4	60.1
(Seasonally adjusted)	60.5	60.6	60.8	60.8	60.9	61.0	60.7	60.9	60.7	60.5	60.7	60.9	60.7

 

 

Consumer Price Index

 

	2017	2018
	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
y-o-y	1.4	0.8	1.3	1.2	1.5	1.5	1.5	1.1	1.4	2.1	2.0	2.0	1.3
m-o-m	0.4	0.4	0.8	-0.1	0.2	0.0	-0.2	-0.2	0.9	0.8	-0.2	-0.7	-0.3

 

 

 

Mining and Manufacturing Production

            (q-o-q, m-o-m, %)

Mining and Manufacturing2			2017			2018
			Annual	Q3	Nov	Q2	Q3	Sep	Oct¹	Nov¹
Mining		(q-o-q, m-o-m)	-	0.8	-1.2	2.7	0.6	-2.9	1.3	-1.7
		(y-o-y)	1.9	4.6	-1.1	0.7	-1.8	-8.6	10.9	0.1
Manufacturing	Production	(q-o-q, m-o-m)	-	0.6	-1.5	3.0	0.3	-2.3	1.1	-1.9
		(y-o-y)	1.6	4.6	-1.9	0.5	-2.3	-9.1	11.2	0.1
	Shipment -Domestic consumption -Exports		0.7 1.4 -0.3	4.3 6.1 1.8	-0.4 -0.6 -0.1	-0.8 -1.3 -0.1	-3.1 -5.1 -0.3	-9.0 -12.6 -3.9	11.2 12.9 8.9	-2.3 -1.3 -3.8
	Inventory3		8.8	2.5	4.9	8.2	5.3	5.3	2.8	5.9
	Average operation ratio		72.6	73.0	71.7	73.2	74,2	73.7	73.8	72.7
	Production capacity (y-o-y)		1.1	0.7	0.0	-1.0	-1.5	-2.1	-1.9	-1.8

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	Q2	Q3	Oct¹	Nov¹
Service activity index	2.6	1.9	0.7	0.5	0.9	0.2	1.0	0.2	0.1	0.6	-0.2

1. Preliminary

 

 

Retail Sales

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

	2015	2016	2017					2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Oct¹	Nov¹
Retail sales	4.1	3.9	1.9	0.4	1.0	0.2	0.9	3.0	0.7	-0.5	0.2	0.5
(y-o-y)	-	-	-	1.6	1.0	3.2	2.1	5.0	4.7	3.9	5.1	1.0

1. Preliminary

 

 

Facility Investment Index

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

	2015	2016	2017					2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Oct¹	Nov¹
Facility investment index	6.9	-1.3	14.1	6.0	3.1	0.2	-1.7	8.4	-11.0	-6.2	2.2	-5.1
y-o-y	-	-	-	18.2	17.8	20.6	2.0	9.4	-5.9	-13.6	9.4	-10.0

1. Preliminary

 

Construction Completed

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

	2015	2016	2017					2018
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Oct¹	Nov¹
Construction completed (constant)	5.0	15.4	10.1	4.3	-0.2	-0.3	-0.1	2.5	-4.9	-4.4	-1.8	-0.9
y-o-y	-	-	-	17.7	13.6	12.7	-0.5	1.5	-3.4	-9.8	-3.1	-10.6

1.  Preliminary

 

 

Composite Indices of Coincident and Leading Indicators

 

	2018
	Apr	May	Jun	Jul	Aug	Sep	Oct¹	Nov¹
Cyclical indicator of coincident composite index	99.7	99.6	99.4	99.1	98.9	98.6	98.4	98.2
(m-o-m, points)	-0.1	-0.1	-0.2	-0.3	-0.2	-0.3	-0.2	-0.2
Cyclical indicator of leading composite index	100.1	100.1	100.0	99.8	99.4	99.2	98.8	98.6
(m-o-m, points)	-0.3	0.0	-0.1	-0.2	-0.4	-0.2	-0.4	-0.2

1. Preliminary

 

 

Exports and Imports

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

	2016	2017				2018
	Annual	Annual	Q3	Q4	Dec	Annual¹	Q1	Q2	Q3	Q4¹	Dec¹
Exports	495.43	573.69	151.05	143.54	49.04	605.47	145.1	151.6	153.6	155.1	48.46
(y-o-y)	-5.9	15.8	24.0	8.4	8.8	5.5	9.8	3.1	1.7	8.1	-1.2
Average daily exports	1.81	2.13	2.13	2.23	2.18	2.24	2.17	2.30	2.28	2.23	2.15
Imports	406.19	478.48	120.85	123.40	43.53	534.99	132.37	133.08	130.31	139.23	43.91
(y-o-y)	-6.9	17.8	17.9	11.6	13.6	11.8	13.7	13.0	7.8	12.8	0.9
Average daily imports	1.49	1.78	1.70	1.91	1.93	1.98	1.98	2.02	1.93	2.00	1.95

1. Preliminary

 

Please refer to the attached PDF