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(2nd LD) Industrial output dips 1.9 pct in Jan. on slump in auto and chip-making segments

All News 10:13 March 02, 2016

(ATTN: CHANGES headline; ADDS finance ministry's comments in last 4 paras)

SEJONG, March 2 (Yonhap) -- South Korea's industrial output fell for three months in a row in January due to a slump in the electronics and automaking sectors amid faltering outbound shipments, a government report showed Wednesday.

Production in the mining, manufacturing, gas and electricity industries dropped 1.9 percent last month from a year earlier, contracting for the third consecutive month, according to the report by Statistics Korea. Compared with a month earlier, industrial output also retreated 1.8 percent.

Production in communications equipment tumbled 24.5 percent from a year earlier, while that in the electronic parts and machinery sectors fell 11.2 percent and 1.9 percent on-year, respectively.

Output in the automobile industry also fell 3.1 percent from a year earlier.

Meanwhile, the semiconductor sector's output jumped 15.8 percent and that of oil refiners gained 4.9 percent from a year ago.

"A downturn in exports dragged down all industrial output in January," said Choi Jung-su, director of the short-term industrial statistics division.

Asia's fourth-largest economy posted an 18.8-percent on-year drop in its outbound shipments in January amid waning global demand and low oil prices.

Production in the service sector expanded 3 percent from a year earlier. But it backtracked 0.9 percent from December, the report showed.

For all industries, output moved up 1.8 percent from the same month in 2015, but fell 1.2 percent from a month earlier.

Domestic consumption rose 4.5 percent on-year in January, slowing down from the 8.6-percent on-year gain in October and the 6.2-percent rise in November supported by nationwide discount events.

From a month earlier, however, domestic sales retreated 1.4 percent in January due to a 13.9-percent slump in durable goods, including cars.

"Decreased demand for cars led the entire on-month decline due mainly to the finished tax cut program," said the Statistics Korea official. "But its on-year gain is at a favorable level."

The finance ministry attributed the decline in the January industrial output to one-off factors like the end of a tax-cut program.

"Car sales were largely affected by the expiration of the excise tax reduction. And it also impacted all consumption, production and investment indices," the ministry said in a release.

"But those numbers are expected to rebound in February as the government has decided to revive the tax-cut scheme."

The Seoul government announced a stimulus package in early February to pump-prime the economy by frontloading an additional 21 trillion won (US$17 billion) in budget in the January-March period and extending the tax-cut program until June.


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