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Economy showing gradual industrial recovery despite weakness in construction: KDI

Published: 08 Jan. 2026, 14:44

Export-bound containers are stacked at Pyeongtaek Port in Gyeonggi on Dec. 29, 2025. [NEWS1]

The Korean economy is showing a gradual recovery in industrial production, led by stronger consumption, despite continued weakness in the construction sector, a state-run think tank said Thursday.

"Although the construction sector remains sluggish and manufacturing has undergone some adjustments, improvements in consumption are supporting a moderate increase in production," the Korea Development Institute (KDI) said in its monthly economic assessment.

In November, industrial output rose 0.9 percent from the previous month, driven largely by robust semiconductor production. Exports expanded 13.4 percent from a year earlier in December, reaching $69.6 billion and marking the 11th consecutive month of growth.

The KDI noted that while semiconductor-related exports remain high amid favorable market conditions, the increase largely reflects price surges, while the previous strong growth in the broader production sector has moderated.

"Production outside the semiconductor sector continued to rise modestly, keeping the business sentiment index for manufacturing firms at a low level," the KDI added.

Retail sales, a key gauge of private consumption, fluctuated recently due to temporary factors, such as government policies, but showed a gradual improvement overall.

Retail sales fell 3.3 percent on-year in November, following a brief rebound the previous month. This marked the steepest monthly decline since February 2024, when they dropped 3.1 percent.

Construction investment continued to weaken, with the sector's output falling sharply, the KDI said.

In November, construction output declined 17 percent from a year earlier, following a 24.8 percent drop in the previous month.

In the labor market, despite weak performance in the construction and manufacturing sectors, employment growth widened slightly, driven mainly by the service sector, the report said.

Yonhap