Indicator Up & Business Forecast Down

The investigation said, ”Korean economy is not generally bad. However, the Composite Index of Leading Indicators shows a consecutive minus of 3 months and so the uncertain increase’ has been continued.”

According to a report of ‘Trend of Industrial Activities of August’ published by Korea National Statistical Office on September 27, in August, the production and shipping increased by 8.5% and 7.5% respectively over the same month of last year. The facility investment was 1.3% and increased after the lapse of 3 months.

Showing the favorable tendency of real business in August is because the semiconductor production and shipment increased by 25.0% and 24.9% respectively over the same month of last year, and the productions of motorcar and office equipment increased by 12.8% and 19.0% respectively.

However, the analysis said that the favorable tendency of business indicator came from the technical rebound as the production and facility investment of August decreased by 4.3% and 19.2% respectively over the same month of last year.

In particular, showing the business forecast after 6 months, the increase rate of Composite Index of Leading Indicators showed the minus for 3 months such as -1.4% in June, -0.5% in July and -0.1% in August. The index is to inform of the future business cycle such as the ordering amount of equipments, arrivals of export L/C and building construction permits.

Showing a potential production capacity when operating the production facility perfectly, the production capacity index decreased to the minus for the first time in July. Also, in August, it showed -0.1% owing to the influence on the production facility transfer.

Kim Min-Gyeong, the chief of economic statistics, Korea National Statistical Office said “The business of August seemed to show the increase trend on indicator. However, we have to keep watch over several months as some indicators continue to get worse.”

Kwang-Hyun Kim kkh@donga.com