S.Korea industry production posts largest increase in 30 months

South Korea's Index of All Industry Production soared at its steepest pace in 30 months in August, driven by a resurgent semiconductor manufacturing sector.

The Index of Services experienced sustained growth for the third consecutive month. Specifically, sectors reliant on in-person interactions showed progress as they benefitted from more favorable weather conditions compared to previous months.

Capital investments also showed signs of recovery, largely due to the low base effect from the significant dip in the prior month. However, sectors like machinery and transportation equipment still lagged behind.

According to data from Statistics Korea released on Wednesday, the Index of All Industry production in August increased by 2.2 percent from the previous month on a seasonally adjusted basis. 

The index reached 112.1, with 2020 as its base year. This indicates a month-on-month growth of 2.2%, marking the highest since the 2.3% uptick seen in February 2021.

The report's sector-by-sector analysis showed universal growth: mining and manufacturing surged by 5.5%, construction grew by 4.4%, services edged up by 0.3%, and public administration increased by 2.5%.

Remarkably, the mining and manufacturing sector saw its most significant leap in 38 months since June 2020. Notably, this is the inaugural instance in 17 months, dating back to March 2022, where all four sectors exhibited growth.

The semiconductor industry took the lead in this industrial resurgence, boasting a 13.4% growth from the prior month – its highest since March of the previous year when it achieved a staggering 30.9%. Year-on-year, the industry reflected an 8.3% growth, signaling its first positive trajectory in 13 months since last July.

The manufacturing output also stood strong with a 5.6% increase, pushing the average operational rate in the manufacturing realm to 73.4% - the highest recorded in a year.

Boosted by an uptick in overseas travel and thriving arts, sports, and leisure sectors, which expanded by 6.2%, the service industry grew by 0.3%.

Lastly, facility investments made a considerable leap of 3.6% compared to the previous month. Yet, in a year-over-year comparison, it contracted by 14.9%, a more significant decline than the 11.2% decrease seen in the prior month.

Write to Jin-gyu Kang at josep@hankyung.com