Omicron slows industrial production growth

Eo Woon-sun, a senior Statistics Korea official, announces February's industrial output at the government complex in Sejong on Thursday. [YONHAP]

Industrial production rose 6.5 percent in February on year, but the increases were dependent on the base effect, meaning they reflected very low levels from a year ago.

When compared to the previous month, the service sector -- particularly hotels and restaurants -- showed a marked decline due to the Omicron wave of Covid-19 infections.

According to Statistics Korea Thursday, industrial production in mining and manufacturing in February rose 6.5 percent on year and 0.6 percent compared to the previous month.

Industry has benefitted from robust exports, especially of semiconductors, which are Korea's largest export category. Production of semiconductors increased 31.3 percent.

Industrial output, a broader measure that includes fishery and forestry, construction, service and public administration activity, increased 4.3 percent.

Compared to the previous month, industrial output fell 0.2 percent. February was the second consecutive month in which industrial output fell compared to the previous month.

This was largely due to depressed services.

While service activity rose 3.8 percent year-on-year, it fell 0.3 percent on-month. That was the second month in a row it fell.

Statistics Korea noted that hotel and restaurant activity fell 4 percent on-month, largely due to the Omicron wave.

Spending on arts, culture and leisure fell 7.3 percent month-on-month as people avoided gatherings, the agency said.

Retail sales year-on-year grew 1.6 percent but only 0.1 percent compared to January.

Facilities investment rose 2.1 percent on-year but dropped 5.7 percent compared to the previous month.

“Industrial production and retail sales increased but services and investment declined [month-on-month] due to increase in the number of people infected [with Omicron],” said Eo Woon-sun, a Statistics Korea official. “One could say the economy showed signs of staggering for the second consecutive month.”

Finance Minister Hong Nam-ki raised concerns on the latest report.

“Last month, industrial output slowed for the second consecutive month,” Hong posted on Facebook Thursday. “Yet our economy, while facing difficulties, is continuing with its economic recovery.”

He said Omicron and the war in Ukraine were major risks.

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