Current Economic Situation, July 2020

 

Services and Retail Sales Rise,

Manufacturing and Construction Remaining Weak

 

Service output and retail sales rose from the previous month in May.  Manufacturing production and completed construction works fell, as well as facilities investment.

 

Industrial production fell 1.2 percent from the previous month in May.  Service output continued to improve (up 2.3%, m-o-m and down 4.0%, y-o-y), and mining and manufacturing production continued to fall (down 6.7%, m-o-m and down 9.6%, y-o-y).  Industrial production decreased 5.6 percent year on year.

 

Retail sales rose in May (up 4.6%, m-o-m and up 1.7%, y-o-y).  Facilities investment (down 5.9%, m-o-m and up 3.6%, y-o-y) and completed construction works (down 4.3%, m-o-m and down 5.8%, y-o-y) went down.

 

Exports fell 10.9 percent year-on-year in June, declining slowly compared with the previous month backed by more days worked (2 days) and recovering global demand.  Average daily exports, an indicator calculated according to the days worked, fell (US $2.05 billion (June 2019) → US $1.67 billion (June 2020)).

 

The consumer sentiment index (CSI) improved 4.2 points in June to 81.8.  The business sentiment index (BSI) for the manufacturing sector improved 2 points to 51, and the BSI outlook for July went up 2 point to 51. 

 

The cyclical indicator of the coincident composite index for May fell 0.8 points to 96.5, and the cyclical indicator of the leading composite index dropped 0.3 points to 98.9

 

The economy lost 352,000 jobs year-on-year in June, service jobs declining at a slower rate and manufacturing job losses accelerating.  The unemployment rate rose 0.3 percentage points from a year ago to 4.3 percent.

 

Consumer prices stayed unchanged from a year ago in June, oil prices continuing to fall and meat prices rising.  Core inflation rose 0.6 percent.

 

KOSPI rose in June on expectations of global economic recovery.  The won strengthened and Korea treasury yields went up.

 

Housing prices continued to rise in June (up 0.14% → up 0.41%, m-o-m), as well as Jeonse (lump-sum deposits with no monthly payments) prices (up 0.09% → up 0.26%, m-o-m).

 

The economy has seen employment declining at a slow rate and domestic demand continuing to improve.  However exports and industrial production remain weak due to sluggish global demand amid the COVID-19 pandemic. 

 

Volatility in the global financial market has eased and some economic indicators improve as major economies are lifting lockdowns, but there are worries over global recession amid continuing uncertainties surrounding the spread of COVID-19 and conflicts between major economies.

 

The government will help the economy take advantage of the recent improvement in domestic consumption, and will work to implement as planned the second-half policies, the 3^rd extra budget and the Korean New Deal to boost the economy and prepare for a post COVID-19 world.

 

 

Key Statistics

 

Employment

 

	2017	2018		2019						2020
	Annual	Annual	Q4	Annual	Q1	Q2	Jun	Q3	Q4	Q1	Q2	May	Jun
Number of employed (million)	26.73	26.82	26.97	27.12	26.46	27.26	27.41	27.38	27.39	26.75	26.85	26.93	27.06
Employment rate (%)	60.8	60.7	60.9	60.9	59.6	61.3	61.6	61.5	61.4	59.9	60.0	60.2	60.4
(Seasonally adjusted)	60.8	60.7	60.7	60.9	60.8	60.8	60.9	60.9	61.2	61.1	59.5	59.6	59.7

 

 

Consumer Price Index

 

(%)

	2019							2020
	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun
y-o-y	0.7	0.6	0.0	-0.4	0.0	0.2	0.7	1.5	1.1	1.0	0.1	-0.3	0.0
m-o-m	-0.2	-0.3	0.2	0.4	0.2	-0.6	0.2	0.6	0.0	-0.2	-0.6	-0.2	0.2

 

 

Mining and Manufacturing

 

(Percentage change from the previous period, %)

1. Preliminary

2. Including mining, manufacturing, and electricity and gas supply

3. End-period

Service Output

 

(Percentage change from the previous period, %)

	2017	2018			2019					2020
	Annual	Annual	Q3	Q4	Annual	Q1	Q2	Q3	Q4	Q1¹	Mar	Apr¹	May¹
Service output	1.9	2.3	0.3	0.1	1.4	0.3	0.3	0.6	0.7	-3.0	-4.4	0.5	2.3

1. Preliminary

 

 

Retail Sales

 

(Percentage change from the previous period, %)

	2017	2018	2019					2020
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1¹	Mar	Apr¹	May¹
Retail sales	1.9	4.3	2.4	0.9	0.5	0.3	1.9	-6.4	-0.9	5.3	4.6
y-o-y	-	-	-	1.6	2.0	2.2	3.4	-2.9	-8.0	-2.2	1.7

1. Preliminary

 

 

Facility Investment Index

 

(Percentage change from the previous period, %)

	2017	2018	2019					2020
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1¹	Mar	Apr¹	May¹
Facility investment index	14.4	-3.6	-6.2	-5.0	3.2	1.0	4.3	-3.0	7.5	4.6	-5.9
y-o-y	-	-	-	-18.7	-6.7	-1.9	3.7	7.0	10.4	1.5	3.6

1. Preliminary

 

Construction Completed

 

 

(Percentage change from the previous period, %)

	2017	2018	2019					2020
	Annual	Annual	Annual	Q1	Q2	Q3	Q4	Q1¹	Mar	Apr¹	May¹
Construction completed (constant)	11.4	-4.2	-6.9	1.0	-1.8	-3.5	1.0	4.1	4.6	-3.9	-4.3
y-o-y	-	-	-	-10.2	-6.8	-8.2	-2.9	0.3	3.2	-3.2	-5.8

 1. Preliminary

 

 

Composite Indices of Coincident and Leading Indicators

 

	2019			2020
	Oct	Nov	Dec	Jan	Feb	Mar	Apr¹	May¹
Cyclical indicator of coincident composite index	100.0	99.9	100.2	100.5	99.8	98.6	97.3	96.5
m-o-m (points)	0.0	-0.1	0.3	0.3	-0.7	-1.2	-1.3	-0.8
Cyclical indicator of leading composite index	99.4	99.8	100.2	100.3	100.2	99.6	99.2	98.9
m-o-m (points)	0.3	0.4	0.4	0.1	-0.1	-0.6	-0.5	-0.3

1. Preliminary

 

Exports and Imports

 

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

	2017	2018	2019						2020
	Annual	Annual	Annual	Q1	Q2	Jun	Q3	Q4	Q1	Q2	May	Jun¹
Exports	573.69	604.86	542.22	132.65	138.49	44.01	134.73	136.36	130.24	110.40	34.85	39.23
(y-o-y, %)	15.8	5.4	-10.4	-8.5	-8.7	-13.8	-12.3	-11.8	-1.8	-20.3	-23.7	-10.9
Average daily exports	2.13	2.24	1.99	2.03	2.02	2.05	1.95	1.96	1.92	1.65	1.62	1.67
Imports	478.48	535.20	503.34	123.80	128.77	40.10	124.96	125.81	121.86	107.98	34.46	35.60
(y-o-y, %)	17.8	11.9	-6.0	-6.5	-3.3	-10.9	-4.1	-9.7	-1.6	-16.1	-21.0	-11.2
Average daily imports	1.78	1.98	1.85	1.89	1.88	1.87	1.81	1.81	1.79	1.61	1.60	1.51

1. Preliminary

 

Please refer to the attached pdf