South Korea’s Ministry of Economy and Finance reported that all-industry production fell 1.3% month on month in August, although it remained 1.9% higher than a year earlier. Services production rose 0.5%, but mining and manufacturing output declined 4.8%, driven by temporary factors including automakers’ summer holidays and base effects following strong production growth in June. Automobile production dropped 24.8%, also weighing on rubber and plastics output. Retail sales fell 1.8% as passenger car and durable goods sales weakened, while equipment investment declined 9.5% after concentrated ship and aircraft purchases in July. Equipment investment nevertheless rose 16.1% year on year, extending its annual growth streak to eight months. Construction activity increased 1.9% from July and 1.3% from a year earlier, its first annual increase in 28 months, as residential and nonresidential building strengthened. The coincident composite index rose 0.5 point, while the leading index slipped 0.1 point. The ministry expects the main activity indicators to rebound in September as temporary disruptions fade, consumer sentiment improves and exports, capital goods imports and machinery orders remain strong. It identified uncertainty from the Middle East war, higher bond yields following monetary tightening by major economies and prolonged high oil prices as continuing risks. The government plans to prioritize price stability and focus policy capacity on housing, employment and financial support for lower-income households.

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