Gov’t: Recovery on target

The government’s view on economic recovery remains positive despite falls in facility investment and manufacturing output as the country’s overall industrial production and private consumption improved.

The Ministry of Strategy and Finance said yesterday that total industrial output rose 0.3 percent in July from a month earlier and 1.5 percent from a year earlier. The increase was led by 0.8 percent growth in construction and a 5.9 percent rise in public administration.

But the country’s flagship mining and manufacturing industries shrank 0.1 percent after a slight gain in June, serving as a drag on the recovery.

The automobile industry saw a 6.4 percent decrease in production and the machinery industry fell 5.5 percent. The service industry also fell 0.2 percent month-on-month in July, due to a 9.8 percent shrinkage in the real estate service sector, the ministry said. Service output, however, rose 0.8 percent year-on-year, the data showed.

Facility investment remained sluggish with a 2.5 percent decrease last month compared to the previous month. It slid 8.3 percent on-year.

On the other hand, private consumption has improved, with increases in retail sales in July. Total retail sales jumped 1.1 percent following a 0.9 percent growth in June. A 3.4 percent increase in non-store retail sales led the growth.

The government sees some signs of improving consumption lately, saying that it expects a gradual recovery in the second half. But sales at three major department stores dipped 0.7 percent while those at large retailers also fell 1.2 percent, the data showed.

“Due to labor strikes in the automobile industry and restrictions on power consumption, manufacturing output is expected to fall again in August,” said Lee Hyung-il, an economist at the Economic Policy Bureau at the Finance Ministry. The composite leading indicator, which forecasts economic conditions in the next six months, also climbed 0.3 percentage points, rising for the fourth straight month.

BY SONG SU-HYUN [ssh@joongang.co.kr]