(2nd LD) Industrial production rebounds in May, retail sales suffer the biggest drop in 10 months
(ATTN: UPDATES with more details in paragraphs 13-15)
By Kim Soo Yeon
SEOUL, June 30 (Yonhap) – South Korea’s industrial production rebounded in May, but retail sales fell the most in 10 months, the latest sign that the recovery in private spending still remains weak amid the pandemic, according to data released on Wednesday.
Industrial production rose 0.1% in May from the previous month, rebounding from a 1.2% contraction in April, according to data compiled by Statistics Korea.
Compared to a year earlier, it increased 7.3 percent.
The rebound came as output in the public administration sector increased despite declines in manufacturing and services output, according to the statistics agency.
In May, government output rose 8.1% in one month, the biggest gain in more than six years, as the government increased spending on COVID-19 vaccine purchases and the campaign vaccination.
Investments in facilities fell 3.5% month-on-month in May, compared to an increase of 3.8% the month before.
Retail sales, an indicator of private spending, fell in May after increasing for the second consecutive month in April.
Retail sales fell 1.8% from the previous month, a turnaround from a 2.1% gain in April, data showed.
This is the largest monthly drop since July 2020, when retail sales fell 6.1%.
The government said clothing sales declined in May, affected by a higher base effect and frequent rains.
The face-to-face service industry, including the hospitality and hospitality segments, has been hit hard by the pandemic, with people refraining from visiting offline stores amid concerns about the risks of ‘infection.
But amid the hot weather, pent-up demand and relaxed virus restrictions have prompted more people to step up spending in recent months.
“Major economic data showed some slumps last month, but we believe momentum for an economic recovery has been maintained as these declines were largely caused by the base effect,” Eo Woon-sun said. , a senior Statistics Korea official, at a press briefing.
The finance ministry said the country’s campaign to speed up vaccine deployment will increase public sector production and private spending.
South Korea plans to vaccinate some 36 million people, or 70 percent of its 52 million people, by September with the goal of achieving herd immunity by November.
Asia’s fourth-largest economy is on the path to recovery thanks to robust exports and a revival of domestic demand.
Exports, which make up half of the country’s economy, jumped 45.6% year-on-year in May, extending their gains for the seventh consecutive month.
The government has raised its growth outlook for 2021 for the country’s economy to 4.2%, from an earlier estimate of 3.2%. The Bank of Korea (BOK) is forecasting growth of 4% for this year.
The finance ministry unveiled a package of measures to stimulate domestic demand and reduce the income gap induced by the pandemic with the aim of helping the country achieve a “full” economic recovery.