S. Korea's March industrial output rises while consumption and investment fall

Industrial output maintained its growth momentum in March on the back of strong chip production but retail sales and facility investment lost ground.

Shin Se-byuck covers the latest findings.

South Korea's overall industrial output rose for a second straight month in March, led by a surge in semiconductor production,.. posting the biggest rise in 19 months.

According to Statistics Korea on Wednesday, the country's industrial production index climbed point-9 percent on-month to 114-point-7.

That follows a 1.0 percent gain in February, marking a continued rebound after a 1-point-6 percent drop in January.

Manufacturing output jumped 2-point-9 percent from the month before.

In particular, chip production spiked 13-point-3 percent, the largest increase since August 2023.

Statistics Korea attributes this to sustained demand for advanced memory chips.

"Semiconductor output has been climbing steadily since last year. In particular, demand for high-performance chips like HBM and DDR5 has reached record highs."

Despite gains in production, the domestic economy remains sluggish.

Construction output dropped 2-point-7 percent, while service-sector production, a key indicator of consumer activity, dipped 0-point-3 percent.

Both consumption and investment declined, falling by point-3 percent and point-9 percent respectively from the previous month.

Regarding consumption,.. by category,.. sales of nondurable and semi-durable goods rose, but durable goods like mobile phones and computers saw a sharp 8-point-6 percent drop.

Statistics Korea attributed the sharp decrease in durable goods to a base effect from last month's surge in smartphone sales and early EV subsidies.

For investment, facility investment fell point-9 percent as machinery investment declined, despite gains in transport equipment such as passenger cars.

Pointing to weakening domestic demand as the main reason behind the divergence between industrial output and consumption, an expert said both short and long-term government efforts are needed to tackle the slowdown amid internal and external uncertainties.

"The government is using a supplementary budget and potential rate cuts to support demand, but in the long run, we need new growth engines, as most industries, aside from semiconductors, are losing ground to China, hurting both exports and domestic demand."

Shin Se-byuck, Arirang News.