Seoul: South Korea's industrial output experienced a decrease in May compared to the previous month, primarily attributed to a drop in chip production resulting from a base effect and volume adjustments, as revealed by recent data. The period also saw a slight rebound in retail sales.
According to Yonhap News Agency, industrial production declined by 0.3 percent in May from April, marking a continuation of on-month losses for two consecutive months. Data from the Ministry of Data and Statistics indicated that output in the crucial mining and manufacturing sectors fell by 3 percent, driven by reduced production of chips and pharmaceutical products, although the automobile sector saw an increase.
The Ministry of Finance and Economy explained that the overall decline in industrial output occurred amid raw material supply disruptions following the Middle East conflict, alongside an adjustment in chip production, which had recently surged. Specifically, semiconductor production dropped by 10 percent, attributed to reduced memory chip shipments, including dynamic random-access memory (DRAM), due to a base effect and volume adjustments.
Lee Doo-won, a senior official at the data ministry, stated that the fundamentals of the chip sector remain robust. He noted that with chipmakers reaching production capacity limits, some adjustments were necessary in line with shipment schedules. Lee expressed optimism that the launch of new chip fabs could lead to increases in both value and volume.
An official from the finance ministry echoed this sentiment, suggesting that the chip output decline is a temporary adjustment. The official highlighted that chip exports surged by 188.4 percent during the first 20 days of June, indicating potential rebound in future reports.
In addition to chip production, the output of pharmaceutical products decreased by 17.5 percent, while vehicle production increased by 2.7 percent in May. The data ministry reported a 1.3 percent rise in service sector output, driven by stronger performances in finance and science industries.
Retail sales, an indicator of private spending, rose by 0.1 percent, with growth seen in automobile fuel and cosmetics sales. However, sales of durable goods such as automobiles fell by 3.4 percent, while sales of non-durable goods like fuel and semi-durable goods including clothing increased by 0.9 percent and 2.3 percent, respectively.
Facility investment saw a slight decrease of 0.1 percent in May, attributed to the weak performance of the machinery industry. Investment in transportation rose by 0.2 percent, while investment in the machinery industry, including precision equipment, fell by 0.2 percent.
Looking forward, the finance ministry anticipates improvements in major industrial indicators following peace talks between the United States and Iran, which have led to a significant decline in global crude prices. The ministry also emphasized its commitment to alleviating burdens on small and medium-sized businesses amid a strong U.S. dollar and high consumer prices.