Current Economic Situation, July 2019

 

Consumption and Services Increase,

Manufacturing and Corporate Investment Slowing Down

 

 

Consumption and services improved in May.  Mining and manufacturing slowed down, along with facilities investment and construction investment.  Employment continued to rise in June and consumer prices stayed stable. 

 

Industrial production fell 0.5 percent in May due to weak mining and manufacturing (up 1.9% → down 1.7%, m-o-m).  Service output (up 0.4% → up 0.1%, m-o-m) improved somewhat.

 

Retail sales (down 1.2% → up 0.9%, m-o-m) rose in May.  However, facilities investment (up 4.6% → down 8.2%, m-o-m) slowed down, and construction investment (down 2.1% → down 0.3%, m-o-m) continued to fall. 

 

Exports declined 13.5 percent year-on-year in June, falling for a seventh consecutive month, due to low semiconductor prices and weak global demand.

 

Consumer confidence edged down 0.4 points to 97.5 in June, and the business sentiment index (BSI) fell 1 point to 75, the BIS outlook for July staying at 75. 

 

The cyclical indicator of the coincident composite index improved 0.2 points in May to 98.6, and the cyclical indicator of the leading composite index fell 0.2 points to 98.1.

 

The economy added 281,000 jobs year-on-year in June as service jobs continued to grow.  The unemployment rate rose 0.3 percentage points to 4.0 percent.

 

Consumer prices continued to be stable in June, rising 0.7 percent year-on-year, backed by the low prices of services and oil products.

 

In June KOSPI rose, the won strengthened and Korea treasury yields went down. 

 

Housing prices continued to decline in June (down 0.13%, m-o-m), along with Jeonse (lump-sum deposits with no monthly payments) prices (down 0.21%, m-o-m).  Housing transactions continued to fall.

 

Global economic situations surrounding the Korean economy have been worsening as uncertainties linger with regard to the US-China trade conflict and the semiconductor demand remains weak amid slowing global economies.

 

While domestic consumption has been improving, exports and investment have yet to pick up.

 

The government will be prepared for external risks, including Japan’s trade curbs, get ready for the spending of the supplementary budget as soon as it is approved by the National Assembly, and work to successfully implement the 2019 economic policies for the second half, which focus on promoting investment, exports and consumption to boost the economy.  

 

Key Statistics

 

 

Employment

 

	2017		2018						2019
	Annual	Q4	Annual	Q1	Q2	Q3	Q4	June	Q1	Q2	May	June
Number of employed (million)	26.73	26.88	26.82	26.28	27.02	27.02	26.97	27.13	26.46	27.26	27.32	27.41
Employment rate (%)	60.8	61.0	60.7	59.6	61.2	61.1	60.9	61.4	59.6	61.3	61.5	61.6
(Seasonally adjusted)	60.8	60.9	60.7	60.9	60.7	60.5	60.7	60.7	60.9	60.7	60.8	60.9

 

 

Consumer Price Index

 

	2018							2019
	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun
y-o-y	1.5	1.1	1.4	2.1	2.0	2.0	1.3	0.8	0.5	0.4	0.6	0.7	0.7
m-o-m	-0.2	-0.2	0.9	0.8	-0.2	-0.7	-0.3	-0.1	0.4	-0.2	0.4	0.2	-0.2

 

 

Mining and Manufacturing Production

            (q-o-q, m-o-m, %)

Mining and Manufacturing2			2018			2019
			Annual	Q1	May	Q1	Mar	Apr¹	May¹
Mining		(q-o-q, m-o-m)	-	-0.4	0.1	-2.9	2.1	1.9	-1.7
		(y-o-y)	1.3	-1.1	2.2	-2.1	-2.3	0.2	-0.2
Manufacturing	Production	(q-o-q, m-o-m)	-	-0.4	0.1	-3.0	2.3	1.9	-1.5
		(y-o-y)	1.2	-1.4	2.1	-2.1	-2.4	0.0	-0.1
	Inventory³		8.0	1.9	-0.8	-1.6	-0.6	3.2	0.9
	Shipments		-0.2	-1.1	2.6	-1.9	3.1	-0.9	-1.4
	Average operation ratio		73.5	72.8	74.4	71.8	71.5	72.7	71.7
	Production capacity (y-o-y)		-0.2	-0.2	-0.7	-0.4	-0.1	-0.9	-0.9

1. Preliminary

2. Including mining, manufacturing, electricity and gas industry

3. End-period

 

 

Service Output

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

	2017			2018					2019
	Annual	Q3	Q4	Annual	Q1	Q2	Q3	Q4	Q1	Mar	Apr¹	May¹
Service activity index	1.9	1.1	0.0	2.1	0.9	0.4	0.3	0.4	0.3	0.4	0.4	0.1

1. Preliminary

 

 

Retail Sales

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

	2017	2018					2019
	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Mar	Apr¹	May¹
Retail sales	1.9	4.3	2.1	0.6	-0.2	-0.1	1.3	3.5	-1.2	0.9
(y-o-y)	-	-	5.3	5.0	3.8	3.0	1.7	2.5	1.4	3.4

1. Preliminary

 

 

Facility Investment Index

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

	2017	2018					2019
	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Feb	Mar	Apr¹	May¹
Facility investment index	14.1	-3.8	7.1	-7.6	-7.7	0.0	-5.5	-10.4	10.1	4.6	-8.2
y-o-y	-	-	10.2	-4.8	-13.5	-6.0	-19.6	-26.9	-15.6	-6.3	-11.5

1. Preliminary

 

 

Construction Completed

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

	2017	2018					2019
	Annual	Annual	Q1	Q2	Q3	Q4	Q1	Feb	Mar	Apr¹	May¹
Construction completed (constant)	10.5	-5.3	0.8	-4.1	-3.8	-3.7	1.8	-6.5	5.1	-2.1	-0.3
y-o-y	-	-	0.8	-3.5	-9.7	-7.9	-9.5	-12.2	-6.2	-8.3	-5.3

1. Preliminary

 

 

Composite Indices of Coincident and Leading Indicators

 

	2018			2019
	Oct	Nov	Dec	Jan	Feb	Mar	Apr¹	May¹
Cyclical indicator of coincident composite index	99.6	99.3	99.2	99.1	98.6	98.5	98.4	98.6
(m-o-m, points)	-0.1	-0.3	-0.1	-0.1	-0.5	-0.1	-0.1	0.2
Cyclical indicator of leading composite index	99.4	99.1	98.9	98.6	98.3	98.2	98.3	98.1
(m-o-m, points)	-0.3	-0.3	-0.2	-0.3	-0.3	-0.1	0.1	-0.2

1. Preliminary

 

 

Exports and Imports

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

	2018						2019
	Annual	Q1	Q2	Q3	Q4	Jun	Q1	Q2	May	Jun¹
Exports	604.86	145.06	151.62	153.64	154.55	51.08	132.67	138.88	45.89	44.18
(y-o-y)	5.4	9.8	3.1	1.7	7.7	-0.4	-8.5	-8.4	-9.5	-13.5
Average daily exports	2.24	2.16	2.30	2.28	2.22	2.38	2.03	2.03	2.00	2.05
Imports	535.20	132.43	133.15	130.31	139.31	45.00	123.47	128.53	43.64	40.01
(y-o-y)	11.9	13.7	13.0	7.8	12.9	11.0	-6.8	-3.5	-1.8	-11.1
Average daily imports	1.98	1.98	2.02	1.93	2.00	2.09	1.88	1.88	1.90	1.86

1. Preliminary

 

Please refer to the attached PDF.