Consumption in May declinedDomestic consumption was weak in May because people avoided going out to shop due to heavy air pollution, but other economic indicators such as exports and investments showed improvements.
According to Statistics Korea Friday, domestic consumptions in May dropped 0.9 percent from a month earlier, with a particular drop in telecommunications.
Sales in the telecommunication sector dropped 7.3 percent in May.
“Domestic consumption fell due to the base effect from the previous month, when it increased by 0.7 percent,” said Eoh Eun-sun, a director at the statistics agency. “We also believe that the number of consumers dropped as they avoided outdoor activities due to the high concentration of fine dust.”
There were many holidays in May - some lucky people had 11 holidays in one stretch - but even so consumption was weak.
June may be an improvement. The consumer sentiment index reached 111.1 in June, which was the highest level in nearly six and half years, according to the Bank of Korea.
“It appears that the consumer sentiment index was high due to the increase in exports and the possible execution of a government financial stimulus package,” said Kim Jung-sik, an economics professor at Yonsei University. “But domestic consumption will not go up just due to an improvement in consumer sentiment. In order for it to rise, the real incomes should rise. I think changes in domestic consumptions will depend on whether exports continue to increase and the supplementary budget bill will get passed by the National Assembly.”
Overall industrial outputs fell 0.3 percent in May from the previous month. Industrial output decreased for the second consecutive month.
Mining and manufacturing output rose 0.2 percent from a month earlier and output of semiconductors jumped 9.1 percent.
However, industrial output in the service sector dropped 0.3 percent, the first fall in 7 months.
“Facilities investments and mining and manufacturing outputs increased following the rise in the exports,” said Joo Hwan-wook, a director at the Ministry of Strategy and Finance. “But the economic recovery has slowed due domestic consumption and output in the services sector. The government will focus on improvements in exports and investments to lead other sectors of the domestic economy.”
BY KIM YOUNG-NAM [firstname.lastname@example.org]