Economic Indicators Still Mixed After Market Recovery

Is the market really on the rebound? In market research conducted by the economics section of Dong-a-Ilbo, along with the Samsung Economic Research Institute, 10 economic indicators related to consumption and production were selected. The period of research were last January and February, and the same period this year.

According to the research, spending trends showed a weak recovery for mid-level income households in Seoul, but the overall sentiment of the market is still far from thawing out. Due to high oil prices and the check in construction, gas and cement sales have dropped since last year, and machinery production was also lackluster. Consumption rates were meager in the provincial districts, forecasting a delay in any market recovery.

Economic analysts caution that the rosy picture drawn up by the government may simply be the result of a talked-up economy.

Consumption Patterns of Seoul Middle-class Households and Provincial Low Income Households Conflict―

Among the 10 economic indicators, sales at gentlemen’s clothing departments, family restaurants, and washing machines showed strong signs of improvement.

The profits yielded for January and February this year at the gentlemen’s clothing department at the Lotte Department Store increased 6.5 percent since last year. Food service industries such as Marche and Outback Steakhouse also yielded a 10 percent increase in profits during the same period. This year’s washing machine sales by LG Electronics in January and February increased 20 percent since last year, due in part to the marketing of a higher-quality front-loading washing machine for the price of a lower-quality model.

In another part of the same consumption index, however, amusement park ticket sales decreased. Ticket sales for the Seoul Jamsil Lotte World decreased 9.0 percent for January and February, down from 1,074,000 people last year to 985,000.

Buses carrying salesmen from the districts to Nuzon, a wholesale clothing market at Dongdaemun, decreased 18.5 percent from 883 last year to 745 during the months from January to February, reflecting poor economic conditions in the provinces.

Local car sales also dropped 8.4 percent, to 153,000.

Construction and Production Market Still Frozen―

According to a report by the Korea Cement Industrial Association, domestic cement shipments in January and February dropped 44.2 percent from 6,200,000 tons last year to 4,300,000 tons this year. Section chief Baek Seung-myung from the Cement Merchandise Team at Ssangyong Cement stated, “The dull sentiment in the construction market and the cold weather is the main reason cement sales have been so poor.”

Due to high oil prices, gas and diesel consumption rates have also dropped. Gas and diesel sales in January have dropped 1.02 percent and 4.8 percent since last year, respectively.

Sales of bearings, used as basic materials for machinery production, were also dull.

January and February exports of FAG Bearings Korea Corporation, the leading domestic bearings production company, increased 12 percent since last year, but domestic sales decreased five percent.

Expressway traffic freight transportation and specialized cargo transportation rates, that indicate the mobilization of material resources, dropped 9.3 percent from 7,762,739 truckloads in January and February last year to 7,103,470 truckloads this year.