Industrial production rose 4.3% in January

Economy

Published: 02 Mar. 2022, 14:51

Industrial production rose 4.3% in January

A commercical district in central Seoul on Wednesday. Inudstiral ouput in January grew year-on-year. But its pace slowed compraed to December's. The recent Russia-Ukraine conflict is considereed as the biggest risk including inflation pressure. [YONHAP]

Industrial production rose 4.3 percent on year in January, according to Statistics Korea Wednesday.

Due to continuing demand for semiconductors, chip production grew 34.3 percent year-on-year.

Automobile production shrunk 9.3 percent amid a shortage of computer chips for cars.

January's growth was slower than December's 7.4 percent.

“While [January’s] figure wasn’t bad, it was relatively lower because the growth in [December] was exceptionally good,” said Eo Woon-sun, a senior official at the statistics agency.

In manufacturing, the average operating rate in January was 78.3 percent, up 5.4 percentage points from 72.9 percent a year earlier.

Facility investment grew 0.6 percent on year with investment in transportation equipment including airplanes seeing a sharp increase of 16.9 percent.

The previous month, however, facility investment grew 6.6 percent.

Industrial output, a broader measure that includes fisheries and forestry, construction, services and public administration activity, was up 4.3 percent.

The pace slowed from December’s 6.8 percent.

Service activity grew 4.8 percent year-on-year. In the hotel and restaurant category, output grew nearly 38 percent on year but due to a base effect, meaning a year earlier was particularly low due to the pandemic.

Retail sales increased 4.5 percent in January. Spending on non-durable goods such as food and beverages increased 9 percent. Durable goods such as automobile purchase fell 10.9 percent.

Finance Minister Hong Nam-ki said the industrial output report showed Korea’s economic recovery continuing.

“Even amid risk factors such as the spread of the Omicron variant, we were able to reaffirm an economic recovery centered on production and investment [in January] continuing from the end of last year,” Hong said via Facebook on Wednesday.

He said the trend will likely continue in February.

“We expect the current recovery momentum to continue centered on the manufacturing industry’s exports,” Hong said.

On Tuesday, the Ministry of Trade, Industry and Energy reported that export rose 20.5 percent last month to reach $53.9 billion.

It was the first time Korea’s exports exceeded $50 billion in the month of February.

The previous record for the month was February 2012’s $46.3 billion.

Hong, however, raised concerns about the impact of the Russia-Ukraine conflict, which continued to affect Korean financial markets.

The won started Wednesday trading at 1,206 won against the greenback, which was 3.7 won more or up 0.3 percent from Monday.

International oil prices have exceeded $100 per barrel, their highest levels in seven years.

West Texas Intermediate was trading 8 percent higher on March 1 at $103.41 on the New York Mercantile Exchange.

Dubai crude, which Korea imports the most, was traded at $102, a 7 percent increase from the previous day, and Brent was traded at nearly $105, up 7 percent.

According to a study by Hyundai Research Institute, once international oil prices exceed $100 per barrel, Korea’s consumer prices grow an additional 1.1 percentage points.

The rise of consumer prices is likely affect Korea's economic growth rate by lowering it 0.3 percentage points.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]