Industrial output improves but economic sentiment remains negative

The South Korean economy showed some improvement last month with a rebound in its overall industrial output, but the country’s economic players maintained their pessimism about the economy next year.

The country’s on-year industrial output rebounded 4.6 percent in November after declining for the two previous months owing to gains in semiconductors and cars, according to data from Statistics Korea on Thursday.

The figure advanced 1.6 percent from a month earlier, the data showed

“Increased exports in November contributed to the rebound in the total output, especially the manufacturing production,” said the statistics agency in a report.

The mining and manufacturing industries rose 4.8 percent last month from a year ago, while the service sector added 2.5 percent last month from a year earlier.

The country’s exports rose 2.5 percent in November due to increased demand for Korean-made memory chips and cars, the agency noted.

Twenty-one of the past 23 months since 2015 saw falls in exports, weakening the country’s growth momentum.

The production of semiconductors surged 17.8 percent from a year earlier, while that of vehicles climbed 6.2 percent.

“Auto production normalized, as the automobile industry’s labor strike ended, helping the overall output turn around in three months,” said Eo Un-seon, a director at the statistics agency. “The impact of the halt of the Samsung Galaxy Note 7 production got weaker, too.”

In November, private consumption slightly worsened, falling by 0.2 percent from the previous month after nationwide sale festivals ended. Its on-year growth showed a positive 3.2 percent.

“Considering that the government’s policies including a tax cut on consumption, retail sales turned out better than expected,” said an official at the statistics agency.

The retail sales index stood at 121.3 in November, the second-highest following an all-time high of 121.5 in October.

Meanwhile, sentiment about the domestic economy worsened in December compared to November, the Bank of Korea said Thursday.

The central bank’s Economic Sentiment Index, a comprehensive indicator combining the Business Sentiment Index with the Consumer Sentiment Index, dipped 1.6 points to 91.2 this month from November.

An index figure below 100 means there are more businesses and consumers with pessimistic views on the economy than those with optimistic views.

Business sentiment did not improve for the past two months, remaining at 72 in December. The business index for January 2017 slid 1 point to 71, implying an even colder market for the new year.

“Negative forecasts about domestic demand next year and uncertainties about the economy were rampant among the surveyed businesses,” the BOK report said.

By Song Su-hyun (song@heraldcorp.com)