Spinning cogs of industry ignite flicker of hope

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Spinning cogs of industry ignite flicker of hope

Korea’s industrial output crept up in September from a year earlier, but its growth pace remained sluggish, apparently affected by cooling demand amid concerns over the euro zone debt crisis and the global slowdown, a government report showed yesterday.

According to the report by Statistics Korea, production in the mining, manufacturing, gas and electricity industries grew 0.7 percent last month from a year earlier, quickening from the previous month’s 0.3 percent on-year gain.

The output also grew 0.8 percent compared with a month earlier, turning around from three consecutive months of contraction. Service sector production expanded 2.5 percent on-year in September and gained 0.7 percent from a month earlier.

“The mining, electricity and gas industries saw contractions, but the manufacturing sector posted growth,” the report said.

Industrial output growth has been picking up over the past three years, but the pace has been subdued to below a single digit since July when it fell to 0.2 percent from the previous month’s 1.6 percent.

Output figures remain weak as demand for Korean products has been affected by the elongated global economic slowdown.

Last week, the central bank announced that the country’s GDP grew 0.2 percent in the third quarter, slowing from a 0.3 percent gain in the second quarter. This also marked the slowest growth pace in about three years.

Experts worry that things could further slow down in the months to come given the ongoing uncertainty in the euro zone and slumping growth in major industrialized countries.

But the government hopes the economy has hit the bottom in Q3 and will start to rebound in the final months of the year.

The manufacturing industry saw production expand 0.7 percent last month from a year earlier, giving cause for optimism, the report showed. More demand for semiconductors, parts and chemical products helped boost output.

The average rate of facility utilization in this industrial sector also rebounded to 75.2 percent from 73.7 percent in August, the report showed. The August reading was the lowest since May 2009, when the rate fell to 73.6 percent.

Corporate investment logged a slight improvement, but remained mired in a slump. The report showed that companies’ investment in facilities dropped 8.2 percent on-year last month, compared with a 14.2 percent plunge in August.

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