Industrial output down 1.8 percent

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Industrial output down 1.8 percent

Industrial output for mining and manufacturing fell for the second consecutive month in February for the first time in 11 months.

Other economic indicators, including consumption and investment, also retreated.

However, the government stressed that last month’s decline does not signal that the recovery is faltering, saying it was temporary and that the economy will continue to improve in coming months.

Statistics Korea yesterday announced industrial output was down 1.8 percent month-on-month in February after slipping 0.1 percent in January.

The statistics office said production of automobiles lost 7.2 percent month-on-month, while computer chips fell nearly 5 percent.

Electricity equipment production grew 5.8 percent, while output of fashion wear and furs surged 14.9 percent.

In the service sector, health and welfare rose 1.7 percent, while real estate and leasing rose 3.1 percent. Lodging and restaurants, however, fell 4.7 percent month-on-month, while wholesaling stepped back 1.2 percent.

Consumption last month shrank 3.2 percent compared to January. Sales of nondurable goods such as food and beverages retreated. Consumption of durable goods such as telecommunication equipment and computers inched up 0.4 percent.

Investment also retreated compared to the previous month, with machinery up 3.1 percent and transportation traveling down 9 percent.

The Finance Ministry in a separate report said last month that industrial output fell because of several factors, including a post-Lunar New Year slump, while exports were hurt by unusually cold weather in the United States.

Also, auto production fell as consumers wait for the arrival of new cars like Hyundai Motor’s seventh-generation LF Sonata and GM Korea’s Malibu diesel.

The Finance Ministry predicts industrial output to get back on track with the release of new cars and smartphones, especially Samsung Electronics’ Galaxy S5.

“The only possible risk that we have to monitor is the impact of the business suspension on the three mobile carriers,” said ministry official.

SK Telecom, KT and LG U+ were banned from adding new subscribers for 45 days each for offering illegal and excessive subsidies.

When comparing the figures with a year ago, production of mining and manufacturing rose more than 4 percent. This is a sharp turnaround from January, when it fell 4.3 percent year-on-year.

Production in the service industry, although less than the 2.1 percent year-on-year growth posted in January, still managed to post a 1.3 percent expansion.

Investment also saw a significant increase, surging 12.3 percent year-on-year, after a 1.9 percent drop in January. Spending, however, fell 0.7 percent year-on-year last month, in contrast to the 5.5 percent year-on-year growth posted the previous month.

Despite the disappointing indicators, business sentiment continued to improve. According to the Bank of Korea yesterday, business confidence in the economy in March strengthened for the second consecutive month, an indication that the economic recovery is spreading.

Manufacturers’ sentiment was 81, up 3 points from last month’s 78. A reading of 100 indicates that a majority of those surveyed are optimistic about the economy, while a reading below 100 indicates pessimism.

By Lee ho-jeong [ojlee82@joongang.co.kr]

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