*Updated with additional information and market response
SEOUL, March 31 (AJP) -Before the sudden war in the Middle East, South Korea’s industrial front had shown a sanguine face, with manufacturing posting its strongest growth in nearly six years, facility investment surging to a more than decade high and construction activity hitting a record, data showed Tuesday.
Mining and manufacturing output rose 5.4 percent from a month earlier, sharply reversing a 2.4 percent drop in January, as chip production surged 28.2 percent, according to the Ministry of Data and Statistics. It marked the strongest increase since a 6.6 percent gain in June 2020.
Domestic demand, however, remained subdued. Retail sales were flat from the previous month, while services output edged up just 0.5 percent, highlighting still-weak private consumption.
Overall industrial output, which includes services, rose 2.5 percent in February, rebounding from a 0.9 percent contraction in January.
Investment was a key pillar of the rebound. Facility investment jumped 13.5 percent on-month, the fastest increase since November 2014, driven by strong demand in semiconductors and automobiles. Transport equipment, particularly autos, surged 40.4 percent, while machinery including electrical equipment rose 3.8 percent.
The data provided little relief to the market since the upbeat numbers come before the war hit the economy heavily reliant on the Gulf Strait shipping route for energy and raw material imports for manufacturing from petrochemicals to chips.
The main KOSPI lost 1.3 percent, while the dollar added 7.60 won to 1,525.10 won as of 11:00 a.m. The three-year government bond yields at 3.54 percent.
Construction completed, measured in constant prices, soared 19.5 percent from the previous month — the largest increase since records began in July 1997 — rebounding sharply from a 7.8 percent fall in January. Both building construction and civil engineering expanded, rising 17.1 percent and 25.7 percent, respectively.
Forward-looking indicators also pointed to sustained momentum. Construction orders rose 6.7 percent from a year earlier, extending gains to a fourth consecutive month, led by a 24.2 percent jump in building construction, including housing.
Consumption indicators showed a mixed picture. While service output inched up 0.5 percent, the retail sales index was unchanged. Semi-durable goods such as clothing fell 5.4 percent and durable goods including communication devices and computers declined 1.5 percent, while non-durable goods such as food and beverages rose 2.6 percent.
Broader indicators suggested improving economic conditions. The cyclical component of the coincident composite index rose 0.8 point, the biggest gain in more than 15 years, while the leading composite index, which signals future activity, increased by 0.6 point.
Still, the data do not reflect the impact of the Middle East crisis that erupted on Feb. 28, casting uncertainty over the durability of the recovery. The output scorecard on first-month war impact will be released on April 30.
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