After a pandemic-induced slump in 2020, South Korea’s factory output unexpectedly fell in May from April, although it still grew at its greatest annual rate in nearly 11 years. Last month, industrial production fell by a seasonally adjusted 0.7 percent, according to Statistics Korea data released on Wednesday, falling short of the 0.8 percent increase expected in a Reuters poll. It came after a 1.6 percent decline in April, which was the largest since May 2020.
According to the report, automobile manufacturing fell 6.6 percent in April due to auto chip shortages, while mechanical equipment production fell 5.6 percent. This was countered by a 5.3% increase in semiconductor production, the country’s main export. “Due to car chip shortages, production delays in the auto sector resumed (in May). May saw a 21% drop in domestic car production, to 256,000 units, compared to the previous month “Kim Ye-in, a Korea Investment & Securities analyst, agreed. Factory output increased 15.6 percent year over year, missing the prediction of 16.1 percent but marking the strongest growth since June 2010, as production was projected ramping up strongly from a sluggish time in 2020 when the coronavirus pandemic paralyzed economic activities and supply systems. “We expect global demand momentum to stay robust, driving Korea’s exports and manufacturing,” said Park Chong-hoon, Standard Chartered Bank Korea’s head of research.
(Jori Roh contributed reporting; Christopher Cushing and Shri Navaratnam edited the piece.)
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