Invest KOREA

Korea's industrial activities increased by 0.5 percent in November 2023, reaffirming that the industry is recovering, driven by manufacturing production and exports.

Manufacturing and mining production rose by 3.3 percent in November as the growing demands for high-performance semiconductors led to strong gains in semiconductors (12.8 percent) and machinery and equipment (8.0 percent). Service sector output was flat amidst gains in wholesale and retail sales (1.0 percent) and slow financial services (△0.7 percent), transportation and warehousing (△1.4 percent), and leisure (△3.1 percent). Retail sales increased as sales of semi-durable goods declined (△0.4 percent), but sales of durable goods (2.6 percent) and non-durable goods (0.6 percent) grew. Investment in capital equipment declined on a monthly basis, with machinery [computer office equipment, etc.] (△1.5 percent) and transportation equipment [aircraft, etc.] (△5.7 percent) declining together. Construction investment decreased in construction projects (△3.0 percent) due to year-end move-ins, and civil engineering projects fell (△7.3 percent) due to poor performance of plant construction. The cyclical change in the coincident index fell for the sixth consecutive month due to a significant drop in completed construction projects, but the decline slowed on a monthly basis (△0.1 percent). Recently, the Korean economy has seen a gradual recovery driven by manufacturing production and exports, but upside and downside factors coexist. On the production side, the recent improvement in exports, recovery in key industries such as semiconductors and shipbuilding, and stabilization of international oil prices are positive, but uncertainty over the pace of recovery in major economies, geopolitical tensions, and supply chain risks are weighing on the economy. On the consumption and investment side, the recent slowdown in inflation, widespread expectations of an end to monetary tightening next year, and investment cooperation with major countries resulting from active summit diplomacy are upside factors, while household debt, real estate PF risks and sluggish construction orders are downside factors.

‘Strong Sales of Finished Cars in November Drove Exports to Surpass USD 6 Billion for the First Time in Five Months’
→ Domestic consumption ended the falling trend in November with a 1.2 percent year-on-year increase driven by the effect of new model releases and strong SUV sales. November exports rose by 17.0 percent year-on-year as exports of finished vehicles reached USD 6 billion for the first time in five months since June. Production increased by 2.8 percent year-on-year in October, driven by increases in high value-added vehicles, including SUVs and EVs.

‘Production and Shipments Declined in November Due to Base Effect and Capacity Utilization Rate Fall’
→ In November, cumulative orders (year-on-year) won by China, Japan and Korea amounted to 22.09 million CGT (-5.0 percent), 4.29 million CGT (-22.3 percent), and 9.63 million CGT (-41.0 percent), respectively, with Korea continuing to receive selective orders. Production increased, resulting in cumulative deliveries of 8.08 million CGT in November, up 7.1 percent from a year ago. In October, production decreased by 4.1 percent year-on-year and capacity utilization rate fell by 13.2 percent from a year ago, due to the capacity expansion of major shipbuilders and the base effect of high utilization rate in the same month last year. Exports rose by 38.5 percent in November as orders placed since 2021 at higher prices were delivered. Imports decreased by 2.4 percent in October, reflecting strong imports of ship engines and slow imports of ships and ship parts.

‘Production Slowed Further in October, and Exports Rose for Eight Straight Months’
→ Production in October fell by 13.3 percent year-on-year and 8.3 percent month-on-month as domestic consumption remained sluggish despite solid export growth. Despite slow exports to the EU and the Middle East, November exports rose by 14.1 percent from a year ago, led by a strong increase in exports to the United States. In October, imports continued to decline for the fourth consecutive month, falling by 0.8 percent year-on-year, as the lengthened slowdown in the manufacturing sector dampened capital investment.

‘October Production Grew Month-on-Month, Exports Plummeted on Falling Unit Prices’
→Steel production increased by 26.3 percent year-on-year in October, despite sluggish demands for steel bars, due to the base effect of the previous year's production disruptions. Exports in November fell by 11.1 percent year-on-year due to the impact of high export unit prices in the previous year, along with continued sluggishness of China's real estate market and weak domestic consumption in major customers such as the US, EU, and Japan. In October, imports decreased by 0.3 percent year-on-year due to a wider decline of imports from Japan and falling unit prices.

‘Exports Started Declining in November on Lower Unit Prices Despite Growing Volume’
→ October production rose by 5.5 percent year-on-year with Korean refineries increasing their capacity utilization rates. In November, exports fell by 4.4 percent year-on-year due to lower unit prices.

‘November Exports Grew by 8.4 Percent Year-on-Year as Global ICT Recovery Begins in Full Swing’
→ The global markets of semiconductors and ICT products such as smartphones, computers, and servers are expected to begin recovering in full-scale from Q1 2024, after sharply shrinking from Q3 2023. In October, production fell by 22.2 percent year-on-year and shipments declined by 14.2 percent, while capacity utilization decreased by 22.7 percent and inventories fell by 12.4 percent. Imports saw a year-on-year decrease of 10.4 percent in October, led by strong imports of smartphone parts.

‘Semiconductor Industry Shows Signs of Ending the Decline’
→In October, the semiconductor production index was 142.0, up 14.7 percent year-on-year, but down 11.4 percent month-on-month. November exports reached USD 9.52 billion, the second-best record in 2023, up 12.9 percent from a year ago. The recent increase in semiconductor exports is believed to be the effect of production cuts by semiconductor manufacturers.

&lsquoExports Continued Increasing Based on the Growth of Global High-Value-Added Panel Market’
Despite the LCD production cuts, production decline in October was slower than expected due to the effect of new smartphone releases. In November, panel exports increased by 5.9 percent with the expansion of the global high-value-added panel market, enabling exports to grow for four straight months.