[April Industrial Activity Trends] Production, Consumption, and Investment Record 'Triple Decrease' for the First Time in 8 Months... Semiconductors Defy Trend with 3.1% Increase

Impacted by the repercussions of the Middle East war and the base effects of the previous month's high growth rate, domestic production, consumption, and investment indicators all fell simultaneously in April, recording a so-called 'triple decrease.' This is the first concurrent decline in eight months since August of last year.

According to the 'April Industrial Activity Trends' announced by the National Statistical Office on the 29th, the all-industry production index (seasonally adjusted, excluding agriculture, forestry, and fisheries) last month was 117.8 (2020=100), down 0.6% from the previous month. This reverses the growth trend seen in February (2.1%) and March (0.4%) after three months.

The trends by major indicators are as follows:

■ Production: Petroleum Refining Records Largest Drop in 37 Years and 11 Months... Automobiles Slump Mining and manufacturing production decreased by 0.7% compared to the previous month. Due to crude oil supply concerns caused by the Middle East war and the effects of regular facility maintenance, petroleum refining production plummeted by 19.4%, recording the largest drop in 37 years and 11 months since May 1988 (-22.1%). Chemical product production also fell by 2.1%. The Ministry of Economy and Finance analyzed that the sluggishness in petroleum refining and chemical products accounted for about 0.6 percentage points of the mining and manufacturing decline.

Automobile production decreased by 10.0%, showing the sharpest decline in seven months since September of last year (-15.3%). The causes were cited as production delays due to a fire at an auto parts factory in Daejeon and pent-up demand ahead of new car launches.

Meanwhile, semiconductors held steady, increasing by 3.1% due to the super cycle.

■ Consumption: Largest Drop in 2 Years and 2 Months Due to Base Effects of Durable Goods The retail sales index, a domestic demand indicator, fell by 3.6% from the previous month, recording the steepest drop in 2 years and 2 months since February 2024 (-3.7%). The main factor was the base effect of a 11.1% plunge in sales of durable goods such as communication devices and computers, which had surged in the previous month (March) due to the release of new mobile phones.

Non-durable goods sales also decreased by 1.1%, and vehicle fuel sales dropped by 8.3% due to high oil prices and the alternate-day driving system for public institution vehicles. Service industry production fell by 1.0% as well, affected by the sluggishness of the finance and insurance sector (-7.7%) and the decline in the wholesale and retail sector (-1.5%).

■ Investment: Both Facility Investment and Construction Completed Decline Investment indicators also fell together. Facility investment decreased by 3.6%, with transportation equipment investment dropping by a significant 11.5% due to the base effect of increased aircraft imports. Construction completed (constant) also decreased by 1.4%.

■ Government: "A Temporary Adjustment... Recovery Trend to Resume from May" However, economic indicators showed mixed results. The coincident composite index cyclical change rose by 0.2 points, and the leading composite index cyclical change increased by 0.6 points.

The government evaluated last month's sluggish indicators as a temporary adjustment phenomenon caused by the 'base effects following a high growth trend.' It predicted that the improvement trend would resume, citing the rebound in the consumer sentiment index and the business sentiment index this month.

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol stated at the Emergency Economy Headquarters meeting on the same day, "It received a temporary adjustment due to base effects from the high growth trend," adding, "In May, consumer and business sentiment will improve significantly, and the strong export performance will continue, so the recovery trend will reappear."