The Korean economy continues to recover as exports have been strong. Production, consumption and facility investment improved due to a low base effect.
The economy added 253,000 jobs year-on-year in December. Manufacturing and construction led the increase, while service job growth slowed down.
Consumer price inflation in December rose 0.2 percentage points from the previous month (up 1.3% → up 1.5%, y-o-y) as the electricity rate cut in December 2016 no longer affected the index. Consumer prices rose 1.9 percent over 2017.
Mining and manufacturing production rose 0.2 percent in November (down 1.5% → up 0.2%, m-o-m) due to strong automobiles and mechanical equipment. Service output rebounded (down 1.9% → up 2.5%, m-o-m) backed by the release of new smartphone models, as well as heavy trading in stocks.
Retail sales jumped in November (down 2.9% → up 5.6%, m-o-m) due to strong sales of automobiles and smartphones as new models have been released, and also due to increased sales of winter clothes amid an early cold snap.
Facility investment rebounded in November (down 14.8% → up 10.1%, m-o-m) due to surging investment in semiconductor manufacturing equipment, as well as a low base effect. Construction investment fell (up 0.6% → down 3.8%, m-o-m) as civil engineering works, plant construction and housing construction all declined.
In November, the cyclical indicator of the coincident composite index stayed unchanged from the previous month at 100.4, and the cyclical indicator of the leading composite index fell 0.1 points to 101.2.
Exports increased for the 14th consecutive month in December (up 9.5% → up 8.9%, y-o-y), backed by strong major export items, such as semiconductors, petroleum products and petrochemicals.
In December KOSPI edged down on profit taking, and the dollar-won exchange rate fell amid the weak dollar. Short-term government bond yields rose .
Housing prices continued to grow in December (up 0.13% → up 0.11%, m-o-m) as the prices rose in the Seoul metropolitan area, and Jeonse (lump sum deposits with no monthly payments) prices slowed down (up 0.05% → down 0.03%, m-o-m) due to increased supplies, as well as slowing demand as the fall moving season had ended.
The economy is expected to stay on a recovery path given improving global economies and strong exports. However, job growth has been slowing in the service sector, and internal and external risks linger, such as trade issues and autoworker strikes.
The government will strengthen its risk management, and will work for the current economic recovery to lead to job creation and improvement in the real economy.
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