SEJONG, Oct. 31 (Korea Bizwire) — South Korea’s industrial output for September posted its biggest drop in 19 months due to a fall in auto and electronic parts production, government data showed Wednesday, raising concerns that the economy is on the brink of a slowdown.
Production in the mining, manufacturing, gas and electricity industries backtracked 2.5 percent on-month, following a revised 1.3 percent on-month gain in the previous month.
On a monthly basis, the September reading is the sharpest decrease since February last year.
From a year earlier, industrial output also dropped 8.4 percent, following a revised 2.5 percent on-year rise tallied for August.
The September reading is the worst in almost six years.
Production in the service sector remained flat on-month in September, with a 1.4 percent on-year decline.
Retail sales fell 2.2 percent, compared with a 0.1 percent on-month gain in August. The September drop is the largest in nine months. Retail sales rose 0.5 percent on-year, however.
Facility investment rebounded in September, gaining 2.9 percent on-month, following a 1.6 percent on-month drop in August.
For all industries, production declined 1.3 percent on-month, following an adjusted 0.5 percent on-month rise in August. On a yearly basis, industrial production declined 4.8 percent, the latest data showed.
The statistical office said declines in auto and electronic parts production were a major factor for the slump in September’s industrial output.
Production of vehicles sank 4.8 percent from the previous month, and electronic parts output fell 7.8 percent.
The average factory operation rate stood at 73.9 percent, down 1.8 percentage points from a month earlier.
“Facility investment rebounded for the first time in seven months, but other data remained weak or in slump,” said an official at the agency. “It can’t be denied that the economy is not in a good condition.”
The data came amid rising concerns that Asia’s fourth-largest economy is losing upward steam.
In the third quarter of the year, the South Korean economy grew 0.6 percent on-quarter, the same as the 0.6 percent gain tallied in the second quarter and down from a 1 percent expansion in the first, according to the preliminary estimate by the Bank of Korea (BOK).
From a year earlier, the country grew 2 percent over the three-month period — its slowest on-year growth since the third quarter of 2009.
The BOK revised down its growth target for 2018 to 2.7 percent from 2.9 percent.
In the first nine months of the year, the South Korean economy grew by 2.5 percent.
Sluggish construction and facility investment are seen as exerting considerable influence on the slowdown.
Finance Minister Kim Dong-yeon said the slump in September might have been due to shortened working days and weak facility investment.
“It is too early to say that the economy is going south,” Kim told reporters in Changwon, some 400 kilometers southeast of Seoul, after attending a meeting with businessmen.
“We have to review other related data (before judging whether or not the economy is on a downward path),” he said.
As for the recent crash of the local stock market, the minister reiterated that the government is keeping close tabs on all developments, and emphasized that a set of measures are under review for implimentation.
The benchmark Korea Composite Stock Price Index gained 15 points, or 0.74 percent, to close at 2,029.69 on Wednesday, after falling below the 2,000-point mark.
The local stock market fell for five-straight sessions on heavy sell-offs by foreign investors and woes over a slump in the economy and corporate earnings.