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Economic indicators in November were gloomy

Dec 29,2018
Korea’s economic indicators are as chilly as the winter temperatures, raising the possibility that the growth for 2018 may end up lower than the government’s projection of between 2.6 and 2.7 percent.

Not only did production and investment drop in November, but consumer confidence weakened too.

According to Statistics Korea on Friday, overall industrial output fell 0.7 percent compared to the previous month, a turnaround from a 0.8 percent increase in October.

Although industrial output grew 0.2 percent compared to a year ago, that represents a sharp drop compared to October’s 6.9 percent growth.

Output from mining and manufacturing fell 1.7 percent compared to the previous month. When compared to the previous year, it inched up 0.1 percent, again a significant fall from 10.9 percent growth in October.

This was largely due to declining output from the semiconductor industry, a key export category for Korea.

Compared to a year ago, semiconductor output rose 17.5 percent, even stronger than October’s 15.3 percent. But when compared to the previous month, output fell 5.2 percent, reaffirming analysts’ warnings that the global computer chip market is losing steam.

The monthly decline was the sharpest in five months.

“Semiconductor production has recently seen its favorable growth reverse itself,” said Eo Woon-sun, who works in the industry statistics division of Statistics Korea. “However, it won’t drop sharply in the future.”

Six major brokerages earlier this month lowered their projections for the world’s two leading semiconductor manufacturers: Samsung Electronics and SK Hynix.

The brokerage firms made a joint projection that Samsung’s semiconductor operating profit in the fourth quarter will shrink 12.9 percent compared to the previous quarter to 11.9 trillion won ($10.6 billion). For the first quarter of next year, the projection is a nearly 30 percent drop from this year’s third quarters to 9.7 trillion won. This year, Samsung Electronics’ operating profit from semiconductors reached an all-time high of 13 trillion won.

SK Hynix, which also reported record operating profit for the third quarter of 6.5 trillion won, is expected to see it shrink 15 percent from the previous quarter to around 5.5 trillion won in the fourth quarter, according to the projections made by six brokerage firms. In the first quarter of next year, operating profit is expected to further shrink to 4.2 trillion won, a 35 percent drop from the third quarter.

Demand for chips for cloud storage, which has been the driving force behind the record performance, is weakening, as is demand for smartphone chips.

Production of telecommunication and broadcast equipment dropped sharply. It fell 14.4 percent in November compared to the previous month. When compared to a year earlier, it plummeted 25 percent.

Automobile production increased 1.7 percent compared to a year earlier but fell 2.3 percent compared to October.

Services fell 0.2 percent on a monthly basis despite growth in the wholesale and retail sectors of 1.7 percent.

When compared to a year earlier, the wholesale and retail sectors increased 1 percent, down from the previous month’s 5.6 percent.

Consumer spending was relatively buoyant.

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