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(2nd LD) S. Korea's industrial output grows 6.8 pct in Sept.

All Headlines 14:41 October 31, 2011

(ATTN: ADDS finance ministry's analysis in last 3 paras)

SEOUL, Oct. 31 (Yonhap) -- South Korea's industrial output continued to grow in September from a year earlier, despite persistent uncertainties in the global economy, a government report showed Monday.

According to the report by Statistics Korea, production in the mining and manufacturing industries expanded 6.8 percent last month from a year earlier. The September figure represents the 27th consecutive on-year expansion since July 2009.

The report also showed production gaining 1.1 percent compared to the previous month, marking the first rebound following two months of contraction. In August, industrial output grew 4.7 percent on-year but contracted 1.9 percent from July.

For the third quarter, the country's industrial production moved up 5.1 percent from a year earlier, although numbers dipped 0.1 percent from the second quarter, the report showed.

"Overall growth was fueled by double digit gains in semiconductor and automobiles that offset losses in video and audio equipment and printing sectors," the statistical agency said,

Output of semiconductors and related parts surged 15.5 percent on brisk exports with automobile production jumping 15.2 percent on-year.

The factory operating rate edged up 0.9 percentage points from a month earlier to 81.3 percent of capacity in September, reflecting the general rise in production, according to the report.

The report, however, showed numbers for the service sector, which acts as a barometer of the country's domestic economy, dipping 1.6 percent from the month before.

Retail sales and facility investments posted losses last month vis-a-vis August as consumers cut back on durable goods purchases and companies allocated fewer funds to buying new manufacturing equipment.

In addition, both the coincident and leading economic indexes fell 0.8 percentage points and 0.4 percentage points, respectively, compared to the previous month.

The indexes measure current and future economic conditions and help gauge how the economy is performing at present and will in the future. The dip marked the first time since April that both indexes fell and paints a relatively gloomy picture of the economy.

The report comes as Seoul is facing heightened uncertainty caused by external factors such as general economic slowdowns in major economies, including the United States and China, and concerns facing eurozone countries.

Such developments are bad news for South Korea, which relies heavily on exports to maintain growth. Policymakers are currently maintaining close tabs on overseas developments and trying to set up contingencies to reduce fallouts.

The government sees that the nation's economic recovery remains on track, but some indicators are showing signs of faltering in the face of uncertainty from external market conditions.

"Uncertainties keep lingering over the eurozone fiscal debt crisis, a possible slowdown in the global recovery and future economic trends," the finance ministry said in a press release.

"We will continue efforts to keep our recovery going, while at the same time closely monitoring market trends at home and abroad, and also responding flexibly to changing conditions."


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