SEOUL (Reuters) – South Korea’s industrial output declined unexpectedly in April from March even as exports surged for the sixth straight month.
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Industrial output fell 2.2 percent in the period on a seasonally adjusted basis, data from Statistics Korea showed yesterday, missing the 0.8 percent rise expected by economists in a Reuters survey.
In annual terms, factory output in April rose 1.7 percent after a revised 3.3 percent gain in the previous month.
The March industrial production index was revised up to a 1.2 percent rise on-month from the 1 percent rise reported earlier.
Yesterday’s unflattering outcome adds an element of uncertainty for the Bank of Korea, which plans in July to upgrade the economic growth outlook for this year from the current 2.6 percent.
Production of semiconductors and cars dropped 9.2 percent and 2.6 percent on-month respectively, indicating the limits to growth for local industries’ soaring exports.
“Demand for semiconductors, which has been boosting overall exports, seems to be slowing the second quarter,” said Park Jung-woo, economist, Korea Investment and Securities.
“Exports posted double-digit growth throughout the first quarter, and cannot maintain that so the pace of expansion will come down to a high-single digit in the months ahead,” Mr Park said.
South Korea last month raised its export outlook for the year after first quarter economic growth accelerated to 0.9 percent from 0.5 percent quarterly expansion in the previous period.
“Growth momentum is still there and will continue to improve,” a Statistics Korea official said after the data was released.
Market participants will be looking to May export numbers due June 1 for further clues on global demand, with analysts predicting a 13.6 percent jump from a year earlier.
Service sector output rose 0.1 percent in April in seasonally adjusted monthly terms.