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Economic Trends
The Green Book: Current Economic Trends
Nov 2018

Overview

Industrial activities slowed down in September due to fewer days worked as the Chuseok holiday fell in the month. Exports and consumption have been stable, but investment and employment remain weak, and there are growing uncertainties amid ongoing trade conflicts between the US and China. 

The economy added 45,000 jobs year-on-year in September led by construction jobs.  Employment fell in manufacturing and services. Young adult unemployment declined (9.2%→ 8.8%, down 0.4%p, y-o-y).

Consumer price inflation accelerated in October (up 1.9% → up 2.0%, y-o-y, compared with a month ago) due to a price hike in petroleum products amid rising international oil prices, as well as a low base effect from a year ago when agricultural product prices were low.

All industry production fell in September (up 0.5%→ down 1.3%, m-o-m): Mining and manufacturing production declined (up 1.3%→ down 2.5, m-o-m) due to weak automobiles and electronic components. Service output stayed unchanged, despite a fall in wholesale & retail, backed by strong financial & insurance services and real estate & renting. 

Retail sales fell in September (up 0.1%→ down 2.2%, m-o-m) as the sales of durable goods (down 7.6%) and nondurable goods (down 1.1%) declined. Semi-durable goods sales (up 1.8%) increased.

Facility investment improved in September (down 1.6%→ up 2.9%, m-o-m) as machinery investment increased. Construction completed continued to fall (down 0.6%→ down 3.8%, m-o-m) as both building construction and civil engineering works declined.

In September, the cyclical indicator of the coincident composite index fell 0.3 points to 98.6, and the cyclical indicator of the leading composite index fell 0.2 points to 99.2.

Exports rose 22.7 percent year-on-year in October to US $54.97 billion, a second largest on record, due to strong petroleum products, machinery and petrochemicals. Average daily exports posted US $2.39 billion, a third largest on record. 

In October KOSPI fell amid ongoing trade conflicts between the US and China, as well as worries over Italy’s debt-boosting budget plan. The dollar-won exchange rate rose as the global stock market lost momentum and a yuan weakened. Government bond yields fell.

Housing prices rose in October (up 0.31%→ up 0.19, m-o-m) as price hikes continued in the Seoul metropolitan area. Jeonse (lump-sum deposits with no monthly payments) prices across the country fell (down 0.08%→ down 0.05%, m-o-m), but rose in the Seoul metropolitan area. 

Exports are expected to grow in line with recovering global economies, but job markets are weak and there are external risks, such as US-China trade conflicts, Fed’s rate hikes and increasing volatility in global financial markets.

The government will strengthen its risk management and boost the economy through fiscal spending. Fiscal expenditure will be focused on increasing support for low-income households and small merchants, and on assisting job creation through policies to promote new technologies and industries.


* For further details, please refer to the attached file