Seoul: South Korea's industrial output experienced a decline in May compared to the previous month, primarily attributed to a decrease in chip production driven by a base effect and volume adjustments, data revealed on Tuesday. In contrast, retail sales exhibited a slight rebound during the same period. According to Yonhap News Agency, industrial production decreased by 0.3 percent in May from April, as reported by the Ministry of Data and Statistics. This marks the second consecutive month of on-month losses. Specifically, output in the mining and manufacturing sector, a crucial component of the economy, dropped by 3 percent due to reduced production of chips and pharmaceutical products, although the automobile sector saw an increase. The Ministry of Finance and Economy indicated that the overall decline in industrial output occurred amidst disruptions in the supply of raw materials following the Middle East conflict, coupled with an adjustment in chip production, which had surged recently. The semiconduct or industry's production, for instance, fell by 10 percent, with the data ministry attributing this to a decrease in the shipment of memory chips, such as dynamic random-access memory (DRAM), due to a base effect and volume adjustments. "The fundamentals of the chip sector remain strong," stated Lee Doo-won, a senior official at the data ministry. "With chipmakers' production capacity reaching its limits, there were some adjustments in line with shipment schedules." Lee further expressed optimism about potential increases in both value and volume if new chip fabs commence operations fully. Pharmaceutical product output saw a significant decline of 17.5 percent, whereas vehicle production increased by 2.7 percent during the same timeframe. The data ministry also reported a 1.3 percent on-month rise in the service sector output in May, driven by robust performance in the finance and science industries. Retail sales, serving as an indicator of private spending, improved by 0.1 percent, with growth led by auto mobile fuel and cosmetics. In more detail, sales of durable goods like automobiles decreased by 3.4 percent, while those of non-durable goods such as fuel, along with semi-durable goods including clothing, increased by 0.9 percent and 2.3 percent, respectively. Facility investment saw a minor decrease of 0.1 percent in May compared to the previous month, primarily due to the underperformance of the machinery industry, the data indicated. Investment in the transportation segment rose slightly by 0.2 percent, whereas that in the machinery industry, including precision equipment, declined 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 resulted in a significant drop in global crude prices. The finance ministry also emphasized its commitment to alleviating burdens on small and medium-sized enterprises amid the prevailing strong U.S. dollar and high consumer prices.
