S Korea Industrial Output Jumps as Chip Production Surges

South Korea’s industrial output rose 3.0% in September from August, its strongest monthly gain since March 2011, as semiconductor and car production surged, Yonhap reported via The Korea Times, citing official data released on Friday. Retail sales and facility investment also increased, marking the first month since June in which all three indicators rose together.

Chip and cars drive factory rebound

The all-industry production index stood at 122.7 in September on a seasonally adjusted basis, up from 119.1 in August, when output had fallen 1.2%, according to the National Data Office figures reported by NOCUTNEWS and Seoul Economic Daily. The Korea Times described the jump as “the fastest monthly increase in more than 15 years.” Compared with a year earlier, all-industry output was up 1.1%, NOCUTNEWS reported.

Mining and manufacturing output climbed 9% on the month. Semiconductor production rose 19.2%, which the statistics office linked to memory chips such as DRAM, while automobile output jumped 39.9%. Seoul Economic Daily said car production had dropped sharply in August because of strikes at automakers and summer holidays, creating a base effect. Pharmaceutical output rose 20.6%, and the average manufacturing operating rate rose 5.6 percentage points to 76.8%, NOCUTNEWS said. Service sector output grew 0.5%.

Spending and investment rise

Retail sales increased 3.6% from August, with durable goods led by cars up 4.4%, non-durable goods such as food up 4.2% and clothing up 0.6%. Seoul Economic Daily said it was the largest monthly retail gain since February 2023, and that passenger car sales rose 18.3% after falling 13.3% in August, helped by new model launches. On a yearly basis, retail sales were down 0.4%, according to NOCUTNEWS.

Facility investment grew 5.3%, with machinery up 4.7% and transport equipment up 7.4%. Construction completed rose 5.8% on the month but was 1.6% lower than a year earlier, while construction orders were up 49.8% year on year.

Quarterly picture

For the July-September quarter, all-industry production rose 1.9% from the previous quarter, the fastest pace since the fourth quarter of 2021, Seoul Economic Daily reported. Retail sales, however, fell 1.0% quarter on quarter, a second straight quarterly decline. The paper said analysts attributed the drop to the expiry of an individual consumption tax cut at the end of June, a base effect from high-oil-price relief payments and a stock market correction.

Lee Du-won, director for economic trends statistics at the National Data Office, said September activity rebounded on strong chip output and a recovery in car production and sales, adding that temporary drags from August had eased, according to NOCUTNEWS.

What’s next

The Ministry of Economy and Finance said firm consumption, business sentiment and exports in October point to the underlying growth trend continuing, NOCUTNEWS reported. It said it would focus on stabilising living costs and strengthening growth foundations, citing prolonged high oil prices and global rate hikes as external risks. The coincident index’s cyclical component rose 0.5 point while the leading index’s component slipped 0.1 point.

According to Seoul Economic Daily, the Bank of Korea has said annual growth of 4% would be achievable if fourth-quarter growth reaches 1.4% or more, while a finance ministry official put cumulative growth through the third quarter at 3.6%.

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