The Korean economy has been growing steadily backed by strong exports and consumption. However, investment and employment are slowing down, and uncertainties are increasing amid rising oil prices and trade conflicts between the US and China.
The economy added 45,000 jobs year-on-year in September led by construction jobs. Manufacturing jobs and service jobs fell. Young adult unemployment declined (9.2% → 8.8%, down 0.4%p, y-o-y).
Consumer prices rose faster in September (up 1.4% → up 1.9%, y-o-y, compared with a month ago) as agricultural product prices continued to be high amid heatwaves and as electricity rate cuts given temporarily during the summer ended.
All industry production rose in August (up 0.6% → up 0.5%, m-o-m): Mining and manufacturing production rose (up 0.5% → up 1.4, m-o-m) due to strong automobiles and rubber & plastics. Service output improved (up 0.1% → up 0.1%, m-o-m), despite weak education services, as communications, healthcare and social welfare services improved.
Retail sales stayed flat in August (up 0.3% → 0.0%, m-o-m): Sales of durable goods improved 2.5 percent, but semi-durable goods and nondurable goods fell 1.8 percent and 0.3 percent, respectively.
Facility investment fell in August (down 0.3% → down 1.4%, m-o-m) as machinery investment declined. Construction completed went down (up 0.6% → down 1.3%, m-o-m) as both building construction and civil engineering works declined.
In August, the cyclical indicator of the coincident composite index fell 0.2 points to 98.9, and the cyclical indicator of the leading composite index fell 0.4 points to 99.4.
Exports fell 8.2 percent year-on-year in September due to fewer days worked (4 days) as the Chuseok holiday fell on the month. Average daily exports posted US $2.59 billion, hitting a record high.
In September KOSPI rose on expectations for major companies’ third quarter earnings. The index was also positively affected by the inter-Korean meeting held in the month.
The dollar-won exchange rate fell as the won was expected to strengthen under the revised Korea-US FTA and also as demand for the won rose at the end of the quarter. Government bond yields rose.
Housing prices rose in September (up 0.02% → up 0.31%, m-o-m) due to price hikes in the Seoul metropolitan area. Jeonse (lump-sum deposits with no monthly payments) prices continued to fall across the country (down 0.20% → down 0.08%, m-o-m), but at a slower rate due to rising rents in the Seoul metropolitan area.
The economy is expected to continue to recover given improving global economies and strong exports, but job markets are weak and there are external risks, such as US-China trade conflicts, Fed’s rate hikes and high oil prices.
The government will strengthen its risk management and boost the economy through fiscal spending, which will be focused on increasing support for low-income households and small merchants, as well as on assisting job creation through policies to promote new technologies and industries.
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