Wholesale and Retail Sales Record Small Increase After 11 Months of Decrease

The wholesale and retail business index, a representative indicator of consumption, turned positive after an 11 month’s stay in the negative.

However, it is too early yet to say that domestic demand has started to recover.

On February 9, the Korea National Statistical Office (KNSO) announced that the “service business trend of December 2003” for the wholesale and retail business index of December 2003 showed an increase of 0.6 percent compared to December 2002. Accordingly, the index for wholesale and retail business ended the ten months negative index reading from February of last year which recorded minus 1.8 percent.

The wholesale business index increased by 2.4 percent thanks to the increase in sales of capital goods, household utensils, industrial machine equipment and so on. Retail business increased by 1.8 percent thanks to the increase in sales of the overall retail business. Yet, sales of cars decreased by 17.2 percent.

The index for the overall service businesses of December increased by 2.7 percent compared to a year before.

Transportation, warehouse business and communication services showed an increase of 6.1 percent due to a favorable balance of foreign trade. The transportation business especially showed a remarkably high increase of 20.6 percent in the water transportation business, 27.3 percent in road freight business, and 14.9 percent in air transportation business. Besides, the financial and insurance business increased by 5.2 percent and real estate, leasing service, and service business did by 4.0 percent.

Meanwhile, credit sale business showed large decrease of 38 percent as credit delinquency did not diminish and the issues and use of credit cards became stricter.

The lodging and restaurant business, a typical industry for domestic demand, decreased by 2.8 percent recording four months’ in the negative.

Education service, health and social welfare service, and the services business for public society and individuals all showed decreases recording at -1.2 percent, -3.4 percent, and -2.2 percent, respectively.

Meanwhile, the index for overall service businesses of last year recorded 1.2 percent which was far bellow 2001’s 5.7 percent and 2002’s 8.4 percent.

“Though the index for service business and wholesale and retail business recovered somehow, it is too early to say that business growth has turned to prosperity on a full scale,” said Kim Min-kyeong, the head of economic statistic bureau of KNSO.

Kwang-Hyun Kim kkh@donga.com