According to figures released by Statistics Korea, the production diffusion index for the mining and manufacturing industries in July was calculated at 48.8. (Image: Yonhap)
SEOUL, Sept. 5 (Korea Bizwire) — According to figures released by Statistics Korea, the production diffusion index for the mining and manufacturing industries in July was calculated at 48.8.
The production diffusion index is a tool that takes all of the eighty sub-industries included in the mining and manufacturing industries and measures the types that have experienced production growth on a month-to-month basis.
Using 50 as a baseline, if the index exceeds 50, there is a large number of types of sub-industries that have experienced production growth. If the index drops below 50 then the opposite is true.
The mining and manufacturing industries enjoyed a 1.9 percent increase in production from the month of June.
However, the growth is deduced to have been caused by the recovery, not growth, of a select portion of the sub-industries.
In actuality, 40 sub-industries experienced drawbacks, 38 experienced growth, and two remained stagnant in terms of production.
Since March, when the production diffusion index reached 62.5, it has been unable to rise back above 50.
From April through July, the diffusion index hovered around 40, at one point plummeting to a low of 36.3. The low count can be explained by the comparatively low number of companies that experienced month-on-month production growth.
The “super cycle” that the semiconductor industry has found itself in has nudged the mining and manufacturing industry’s production up by an incremental amount.
Month-on-month production in the semiconductor industry increased by 1.1 percent, which raised the mining and manufacturing industries’ production by 0.10 percent.
Though the production index slightly increased by 0.74 percent thanks to the automobile industry’s production growth in July, the beverage, computer, textile and food industries were unable to avoid a downturn in growth.
One proposed reason for the below-50 diffusion index score is the over reliance on key sub-industries.
A diffusion index score below 50 amidst improving economic conditions would mean that the path to recovery is unstable across the entire economy.
Lina Jang (linajang@koreabizwire.com)
