Last month, industrial production, retail sales, and investment all fell, marking a "triple decline" in industrial activity for the first time in three months since May. This downturn is attributed to decreased production and retail sales, particularly in the automotive sector, as well as a reduction in large-scale investments in ships and aircraft.
According to the National Data Agency's report on industrial activity trends for August 2026, total industrial production fell to 118.7 (2020=100), a decrease of 1.3% from the previous month. While production in the service and construction sectors increased, declines in mining and public administration led to an overall downward trend.
Mining and electricity and gas sectors saw increases, but manufacturing production dropped by 4.8% compared to the previous month. Notably, production in the automotive and rubber-plastics sectors fell, resulting in a 5.1% decrease in manufacturing output.
Lee Do-won, an economic trends statistics officer at the data agency, stated, "Overall, the reduction in working days has led to a 24.8% drop in automobile production. As a result of decreased production of finished vehicles, demand for tires and plastic products also fell, causing an 11% decline in the rubber-plastics sector."
In the service sector, production decreased in retail (-0.7%), finance and insurance (-0.6%), and real estate (-1.6%), but increased in information and communication (4.7%) and professional, scientific, and technical services (2.3%), resulting in a 0.5% improvement compared to the previous month.
Retail sales fell by 1.8% from the previous month, with declines in both durable goods (-4.5%) and non-durable goods (-1.6%), except for semi-durable goods (0.4%). The officer noted, "The concentration of summer vacations in August led to a decrease in passenger car sales. Additionally, sales of home appliances also declined due to discount events in June and July, resulting in reductions in both durable and non-durable goods compared to the previous month."
Investment in facilities saw a 9.5% decline from the previous month, despite a 1.6% increase in machinery for semiconductor manufacturing. However, transportation equipment, including other transport equipment, fell sharply by 32.8%, attributed to base effects from ships and aircraft.
Construction output increased by 1.9% compared to the previous month, with a 3.9% decrease in civil engineering but a 4.5% increase in building construction. Both non-residential projects, such as semiconductor factories, and residential projects, including apartments, showed growth.
Economic indicators presented mixed signals. The coincident composite index, which reflects current economic conditions, rose by 0.5 points to 101.7 compared to the previous month. In contrast, the leading composite index, which indicates future economic prospects, fell by 0.1 points to 104.2.
The government has identified ongoing economic uncertainties, including the instability from the Middle East conflict, rising bond rates due to major countries' monetary tightening, and the long-term burden of high oil prices on households.
A Ministry of Finance and Economy official stated, "We will prioritize stabilizing living costs while focusing our efforts on three key social policy areas: housing, jobs, and financial support for the underprivileged, to ensure that the benefits of growth are widely shared across society."
* This article has been translated by AI.
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