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South Korea March manufacturing output misses forecasts, recovery ongoing
[SEOUL]South Korea's industrial output fell by a seasonally adjusted 0.4 per cent in March from February, data showed on Thursday, missing market expectations and failing to sustain the previous month's strong growth.
The finance ministry brushed the weak data off as temporary, saying March figures had faltered due to strong gains in February. "We're seeing mild but steady improvements in the economy. Growth in the second quarter will be stronger than the first,"said an official from the finance ministry, which issued the data, who asked not to be named as he was not authorised to speak to the media.
The median forecast in a Reuters survey of economists was for the industrial output index to edge up by 0.3 per cent in March on a monthly basis, while the forecasts ranged from a fall of 1.9 per cent to a rise of 1.4 per cent.
The February production index was revised to a 2.3 per cent gain from a preliminary 2.6 per cent rise reported earlier.
On a year-on-year basis, industrial output slipped 0.1 per cent in March after a revised 5.0 per cent drop in February, beating the median 1.8 per cent fall for March forecast in the Reuters survey.
Industrial output was dragged down by a decline in electronic goods production, which fell 7.7 per cent on-month in March as more companies chose to produce in offshore factories, which led to a decline in production of liquid-crystal-display (LCD) panels, the data showed. "There were hopes output would rise on new smartphone models released recently, but today's fall in electronics is likely to dash those hopes in the near term and continue to pressure output," said Kim Doo-un, an economist at Hana Daetoo Securities.
Mr Kim said, however, Thursday's data would not affect markets because first-quarter GDP data has already been published.
South Korea's economy grew 0.8 per cent on sequential terms in the first quarter, slightly topping expectations after plunging in the last quarter of last year, but the economy still faces challenges such as a slowing China and poor domestic tax revenue.
The statistics agency data also showed that service-sector output fell by a seasonally adjusted 0.4 per cent in March on a monthly basis after a revised 1.5 per cent rise in February.
Real estate agencies and rental services, which rose 4.2 per cent in March from February, were undermined by science and technology services and logistics, which fell 3.4 per cent and 1.8 per cent respectively.