Ministry says strike is taking toll on production
According to figures released by Statistics Korea on Friday, the nation’s overall industrial output fell 0.1 percent in August from the previous month, and the figure for mining and manufacturing dropped 2.4 percent during the same period.
Production of cars, in particular, fell 17.7 percent month on month and 12.1 percent year on year, a possible result of the automotive labor union strike. The 17.7 percent decline is the worst since the 27 percent recorded in December 2008 during the global financial crisis.
The manufacturing capacity utilization rate fell 3.4 percentage points from the previous month to record 70.4 percent in August. The figure fell to its lowest level since March 2009, when it recorded 69.9 percent.
“Overall industrial output has weakened, and we believe it has dropped due to the ongoing strike by the automotive industry,” said Yoon In-dae, a director at the Ministry of Strategy and Finance. “The momentum to recover the economic situation might be constrained as uncertainties, including provocations from North Korea, ongoing corporate restructuring and the automotive industry’s strike continue to expand.”
The government said the walkouts by the unions of Hyundai Motor, Kia Motors and General Motors Korea last month is expected to drag down production by nearly 66,000 units. The walkout by Hyundai Motor’s labor union, its first all-out strike in 12 years, is projected to cost the automaker 3 trillion won ($2.73 billion) in losses.
The service and construction sectors showed brighter numbers. In August, service production grew 0.7 percent from the previous month, while construction production rose 3.2 percent.
In August, consumption grew 6 percent year on year and rose 2 percent from July as more people shopped for home appliances amid an abnormally long and pronounced heat wave, Yoon said. A hot real estate market and the release of new smartphone models also boosted consumption figures.
However, the government warned that the recall of Samsung Electronics’ Galaxy Note7 may have negative impacts on future consumption.
Sales of durable goods rose 4.7 percent, and the figure for nondurable goods increased 1.8 percent from the previous month. Quasi-durable goods like clothing, on the other hand, fell 1.2 percent during the same period.
With consumption growing, companies investing in production lines and machinery have improved as well. Facilities investments in machines and transport rose 14 percent compared to the previous month.
Business confidence in August remained unchanged from July, but its outlook for next month improved slightly, the Bank of Korea said Friday.
The business survey index for August, a gauge for measuring how local manufacturers feel about the economy, stood at 71, remaining unchanged for the second straight month. Anything under 100 indicates there are more companies that negatively view economic conditions.
Manufacturing companies’ outlook for next month was 75, a point higher than their outlook of 74 from the previous month.
“Small and midsize companies showed more confidence in their businesses in August, while that of large-size companies and exporting companies dropped a little bit,” said Ha Se-ho, a director at the Bank of Korea.
The government said it would monitor various factors such as rising household debt that might hurt the local economy in near future. It added that it would try to boost the economy through the recently passed supplementary budget.
BY KIM YOUNG-NAM [firstname.lastname@example.org]
with the Korea JoongAng Daily
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