The Korean economy has seen exports and consumption improve. However, investment and employment have yet to pick up, and external uncertainties linger amid ongoing trade conflicts between the US and China. Industrial activities improved in October, and employment growth exceeded 100,000 in November for the first time in five months.
The economy added 165,000 jobs year-on-year in November led by the construction and service sectors. Manufacturing jobs fell. Young adult unemployment declined (9.2% → 7.9%, down 1.3%p, y-o-y).
Consumer prices were stable in November (up 2.0% → up 2.0%, y-o-y, compared with a month ago): Oil product prices became stable, as well as agricultural product prices, and the natural gas rate cut given a year ago began to have no more effect on the index.
All industry production improved in October (down 1.2%→ up 0.4%, m-o-m): Mining and manufacturing production rose (down 2.7%→ up 1.0%, m-o-m) due to strong processed metals and other transportation equipment. Service output continued to increase (up 0.1%→ up 0.3%, m-o-m), despite a drop in welfare services, as financial & insurance services rose.
Retail sales increased in October (down 2.1%→ up 0.2%, m-o-m): Sales of durable goods rose 1.7 percent and semi-durable goods 0.4 percent, while sales of nondurable goods fell 0.6 percent.
Facility investment continued to increase in October (up 3.3%→ up 1.9%, m-o-m) as transportation equipment improved. Construction completed fell (down 3.5%→ down 2.2%, m-o-m) as both building construction and civil engineering works declined.
In October, the cyclical indicator of the coincident composite index fell 0.2 points to 98.4, and the cyclical indicator of the leading composite index fell 0.4 points to 98.8.
Exports in November amounted to US $51.92 billion, posting the third largest on record, backed by strong vessels, petroleum products, semiconductors and petrochemicals, as well as due to more days worked. The January-November exports for 2018 posted the largest on record.
In November KOSPI rose after the US mid-term elections as political uncertainties removed. The dollar-won exchange rate fell on expectations that Fed might slow down its rate hike. Government bond yields fell.
Housing prices rose in November (up 0.19%→ up 0.13%, m-o-m) due to price hikes in both the Seoul metropolitan area and other areas. Jeonse (lump-sum deposits with no monthly payments) prices continued to fall (down 0.05%→ down 0.09%, m-o-m) as prices declined in both the Seoul metropolitan area and other areas.
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 increasing financial market volatility.
The government will strengthen its risk management and work to boost the economy by implementing measures to achieve industrial innovation, create jobs and support low-income households and small merchants. The government will work to fast implement the 2019 economic policies, which have drawn to help achieve an inclusive and dynamic economy.
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