The Korean economy has seen a slowdown in mining and manufacturing production, as well as in investment, due to a high base effect from January-February. However, consumption continued to rise in March.
The economy added 112,000 jobs year-on-year in March led by manufacturing and construction as well as a rebound in the service sector. Young adult unemployment continued to rise (11.3% → 11.6%, up 0.3%p, y-o-y).
Consumer price inflation in April rose 0.3 percentage points from the previous month (up 1.3%→ up 1.6%, y-o-y) due to a price hike in agricultural products and manufactured goods.
Industrial production fell in March (down 0.2% → down 1.2%, m-o-m). Mining and manufacturing production slipped (up 0.8% → down 2.5%, m-o-m) due to a slowdown in automobiles and mechanical equipment. Service output edged up (down 0.2% → up 0.4%, m-o-m) backed by strong wholesale & retail and hotels & restaurants, despite a drop in financial & insurance services.
Retail sales rose in March (up 0.8%→ up 2.7%, m-o-m) as the sales of durable goods and semi-durable goods increased.
Facility investment fell in March (up 1.1%→ down 7.8%, m-o-m), despite an increase in transportation equipment, due to a slowdown in machinery investment. Construction completed fell (down 4.9%→ down 4.5%, m-o-m) as building construction continued to decline.
In March, the cyclical indicator of the coincident composite index stayed unchanged at 99.8, and the cyclical indicator of the leading composite index fell 0.2 points to 100.4.
Exports declined 1.5 percent year-on-year in April (up 6.1%→ down 1.5%, y-o-y) due to a high base effect from a year ago (up 23.8%). However, exports in April exceeded US $50 billion for the second consecutive month backed by strong major exports.
In April, KOSPI rose as concerns over geopolitical risks eased in the wake of the inter-Korean summit and due to an improvement in corporate earnings. The dollar-won exchange rate increased due to rising US treasury bond yields. Government bond yields rose.
Housing prices increased at a slower rate in April (up 0.12%→ up 0.06%, m-o-m) as housing prices stabilized in the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices continued to fall (down 0.13%→ down 0.19%, m-o-m).
The economy is expected to stay on a recovery path given improving global economies and recovering investor confidence. However, young adult unemployment has been rising and external risks linger, such as Fed’s interest rate hikes.
The government will strengthen its risk management, and will continue to work to improve the job market and the real economy by successfully implementing the 2018 economic policies and the recent measures aimed at increasing young adult jobs.
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