Wednesday June 14 2017
South Korea Jobless Rate Falls To 4-Month Low Of 3.6% In May
Statistics Korea l Rida Husna | rida@tradingeconomics.com

South Korea’s seasonally adjusted unemployment rate declined to 3.6 percent in May of 2017 from 4.0 percent in April and reaching the lowest figure since January.

Compared to the prior month, the number of unemployed persons went down by 99 thousand to 999 thousand and employment  fell by 47 thousand to 26,464 thousand people.

The participation rate was 63.6 percent, up slightly from 63.5 in April.

A year ago, the jobless rate was 3.7 percent.

On an unadjusted basis, the unemployment rate also fell to 3.6 percent from 4.2 percent in a month earlier. 




Saturday June 03 2017
South Korea Economy Resilient Despite Turmoil
Charles | charles@tradingeconomics.com

Despite recent geopolitical tensions in the Korean Peninsula and internal political turmoil, South Korea’s economic fundamentals have been surprising resilient. The GDP advanced the most in 1-1/2 years in the first three months of 2017, beating expectations, boosted by exports and investment as the stability of the Won and outperforming stock market continues to attract foreign investors. Also, the additional boost is expected to come from consumer spending as newly elected president Moon Jae-In promised a 10 Trillion Won stimulus plan to foster job creation, support startups, small and medium businesses.

The GDP expanded 1.1 percent on quarter in Q1 2017, above an initial estimate of 0.9 percent. It is the strongest growth rate since Q3 2015, mainly driven by foreign demand, fixed investment, namely machinery and construction investment, namely residential building construction. Year-on-year, the economy expanded 2.9 percent, faster than an initial estimate of 2.7 percent and 2.4 percent in the previous quarter. The central bank sees growth at 2.6 percent in 2017 while the government said it could exceed the 2.8 percent in 2016.

Exports have been growing by double digits since January of 2017 amid improving external demand. In May, sales jumped 13.4 percent year-on-year to USD 45 billion after growing 24.1 percent in April, the most in almost 6 years, boosted by semi-conductors, petroleum products and flat screens. Yet, tensions between South Korea and its top trading partners could undermine further expansion. Trade with China, especially that of car sales, continued to suffer in Q1 2017 and the tourism industry faced the biggest setback in ten years, following Chinese government restrictions prompted by a decision by South Korea to house THAAD missile defense system. In addition, there are fears that exports to US may be reduced as President Trump already named the South Korea-United States Free Trade Agreement unfair. The trade ministry said he is aiming to diversify South Korea's export destinations to reduce reliance on markets such as the United States and China, given persistent downside risks. 

Business confidence has been recovering since the beginning of 2017 amid rising hopes that the new president would reform the labour marketa and the big family-controlled conglomerates that dominate the economy. The Business Survey Index (BSI) in the manufacturing sector reached nearly three-year high in May. And although industrial and manufacturing output grew the least in 3 months in April, the slowdown was due to short-term factors associated with the launch of Samsung Electronic's new line of phones. 

Also, consumer confidence has been improving. The index rose sharply in May, reaching the highest level since April of 2014 as the new president took office promising more government spending to create jobs. So far, the unemployment rate remained stable from 3.5 to 4 percent since 2014, but the downturn in the manufacturing sector may lead to tens of thousands of jobs looses as companies restructure their businesses. Also, the youth unemployment rate has been steady rising and remained above 10 percent in three months to April. President Moon has pleadged to refor the labor market by discouraging contract jobs, increasing the minimum wage and reducing working hours. The new administration also promised to create 810,000 public sector jobs and subsidize living expenses for the youth during job searches. 

On the price front, the inflation rate has been rising since the beginning of 2017 amid higher oil prices. It reached the central bank target of 2 percent in April and policymakers expect the inflation to be 1.9 percent in 2017. As a result, the Bank of Korea held its key rate at a record low of 1.25 percent in May and no changes in monetary policy are expected this year.  




Thursday June 01 2017
South Korea GDP Grows 2.9% YoY To Beat Initial Estimate
Mario | mario@tradingeconomics.com

The South Korean economy expanded 2.9 percent year-on-year in the first three months of 2017, beating the advance estimate of a 2.7 percent expansion and outpacing growth for the previous quarter (2.4 percent). It was the highest print in three quarters. The higher GDP growth was mainly explained by further rises in manufacturing and construction, which more than compensated slower growth in services and contraction in utilities.

Manufacturing went up 4.5 percent, well above the 2.7 percent in the previous quarter and significantly outpacing the 2.3 percent annual growth for the whole 2016 and the 1.8 percent expansion for 2015.

Construction also gained steam in the first quarter (12.2 percent from 10.1 percent). Meanwhile, the decline in agriculture was less pronounced this quarter (-2.4 percent compared to -4.7 percent in the preceding period). Contrastingly, utilities plunged 1.1 percent after a marginal expansion of 0.4 percent in the previous quarter. Services edged down to 1.7 percent growth following a 1.8 percent expansion in the final quarter of 2016.

On a quarterly basis, the economy expanded 1.1 percent, also above initial estimates of 0.9 percent growth and outpacing the 0.5 percent increase for the last three months of 2016.




Thursday June 01 2017
South Korea GDP Surprisingly Expands 1.1% QoQ In Q1
Mario | mario@tradingeconomics.com

The South Korean economy advanced 1.1 percent on quarter in the first three months of 2017, higher than preliminary estimates of a 0.9 percent expansion. Growth outpaced tandem 0.5 percent expansions in the previous two quarters and is the highest since the third quarter of 2015. On the production side, faster growth was explained by improvements in all components, excluding services, which kept growing at the same pace versus the preceding quarter. Construction expanded at a much faster pace of 5.3 percent (vs 4 percent in the initial estimate and 1.3 percent in Q4).

On the supply side, services edged up 0.2 percent in the first quarter of 2017, matching than the 0.2 percent in the last three months of 2016. Contrastingly, construction grew at a much faster pace of 5.3 percent (from 1.3 percent). Manufacturing also gained steam in the first three months of 2017, growing 2.1 percent after expanding 1.8 percent in the previous quarter. Meanwhile, agriculture rebounded in Q1, rising 5.9 percent after contracting 1.8 percent. As for utilities, the 1.4 percent fall was softer than the preceding 3.0 percent decline.

On the expenditure side, private consumption expanded 0.4 percent in the first quarter of 2017 (compared to 0.2 percent in the previous quarter). Government spending grew at a softer pace of 0.5 percent (from 0.6 percent). Meanwhile, gross fixed capital formation expanded 4.9 percent following a 1.0 percent increase in the preceding quarter, with construction leading the way (+6.8 percent from -1.2 percent). Exports rebounded by 2.1 percent after a slight 0.1 percent contraction in the previous three months. Imports also rebounded markedly, increasing by 4.8 percent after also contracting 0.1 percent in the last three months of 2016.

Year-on-year, the economy advanced 2.9 percent, also outpacing initial estimates of a 2.7 percent expansion and above the 2.4 percent growth of the previous quarter.




Thursday June 01 2017
South Korea Trade Surplus Narrows To 4-Month Low In May
Rida Husna | rida@tradingeconomics.com

South Korea's trade surplus fell to USD 5.99 billion in May of 2017 from USD 6.71 billion a year earlier. It was the smallest trade surplus since January, as exports rose less than imports, preliminary data showed.

Year-on-year, sales  increased by 13.4 percent from a year earlier to USD 45.04 billion in April, following a marginally revised 24.1 percent rise in the prior month while market expected a 13.6 percent gain. It was the seventh straight month of increase, as sales went up for: semi-conductors (63.3 percent), petroleum products (29.8 percent) and flat screens (13.0 percent). In contrast, exports declined for wireless devices (-37.0 percent), autoparts (-12.4 percent) and home appliances (-21.0 percent).

Exports to China rose 7.5 percent, slower than a 10.2 percent in a month earlier. Meantime, outbound shipments to the EU countries jumped 21.9 percent (from 64.9 percent in April) and those to Japan also increased by 8.7 percent (from 23.8 percent). In contrast, sales to the US fell by 1.9 percent, following a 3.9 percent rise in the prior month.

Imports jumped 18.2 percent to USD 39.05 billion, compared to an upwardly revised 17.3 percent gain and above forecast of a 14.6 percent gain.

In April 2017,  trade surplus was downwardly revised to USD 12.98 billion but still being the highest on record.

For 2017, exports are expected to increase 2.9 percent, supported by improving global demand, while imports are projected to grow at a faster 7.2 percent. 

The trade balance has been in consistent surpluses since February 2012.




Thursday June 01 2017
South Korea Annual Inflation Remains At Target In May
Charles | charles@tradingeconomics.com

South Korea’s inflation rate advanced to 2 percent in May of 2017 from 1.9 percent in the previous month, consistent with market expectations. It was the second straight month that the inflation rate remained at the central bank's target of 2.0 percent. The result was mainly explained by mild growth in prices of food & non-alcoholic beverages, clothing & footwear and furnishings, household equipment & routine maintenance. On a monthly basis, consumer prices increased by 0.1 percent.

By sector, prices increased at a faster pace for food & non-alcoholic beverages (3.4 percent from 2.6 percent in April), clothing & footwear (1 percent from 0.2 percent), furnishings & household equipment (1.8 percent from 0.9 percent), restaurants & hotels (2.4 percent from 2.2 percent). Also, communication prices decreased at the same rate of 0.3 percent in April.

In contrast, prices increased at a slower pace for transport (4.5 percent from 5.4 percent in April).

Meanwhile, price inflation was steady for: miscellaneous goods & services (2.5 percent) and health (0.7 percent).

On a monthly basis, consumer prices advanced 0.1 percent after retreating 0.1 percent in April. According to Statistics Korea, surging prices of livestock such as pork and poultry were primarily responsible for the increase this month.

Core inflation, which excludes volatile items such as oil and food, increased to 1.5 percent from 1.3 percent in April. 




Thursday May 25 2017
South Korea Maintains Key Rate Steady At 1.25%
Charles | charles@tradingeconomics.com

The central bank of South Korea left its base rate steady for the tenth straight meeting at a record low of 1.25 percent in May, as expected, adopting a stance of stability in its first meeting since President Moon Jae-In's inauguration. Policymakers await the new administration's policy reforms, which unofficially begun with Moon's recent proposal for a 10 trillion Won stimulus in 2017.

Excerpts from the statement by The Bank of Korea:

Based on currently available information the Board considers that the global economic recovery has continued to expand. The global financial markets have shown generally stable movements, with for example the trend of rising stock prices continuing. Looking ahead the Board sees the global economic recovery as likely to be affected by factors such as the directions of the US government's economic policies, the pace of monetary policy normalization by the US Federal Reserve, the movements toward spreading trade protectionism, and political uncertainties in major countries.
 
The Board judges that the trend of domestic economic growth has expanded, as exports and investment have improved although the pace of increase in consumption has remained weak. On the employment front, the number of persons employed has continued to rise significantly year-on-year, although the unemployment rate has also risen as job search activities have increased. Going forward, domestic economic growth is expected to be slightly above the path projected in April. The Board judges that consumption will likely continue its modest trend of growth, but that the trends of improvement in exports and investment should expand compared to the April forecasts.
 
Consumer price inflation has continued at the 2% target level, in line mainly with increases in the prices of petroleum and agricultural, livestock and fisheries products. Core inflation (with food and energy product prices excluded from the CPI) has fallen slightly to the mid-1% range, and the rate of inflation expected by the general public has remained at the mid-2% level. Looking ahead the Board expects that consumer price inflation will for the time being fluctuate at around the 2% level, and for the year as a whole not diverge greatly from the April projection (1.9%). Core inflation appears likely to show a level in the mid- to upper-1% range.
 
Looking ahead, the Board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon, while paying attention to financial stability. As the inflationary pressures on the demand side are not expected to be high although the trend of domestic economic growth is likely to expand somewhat, the Board will maintain its stance of monetary policy accommodation. In this process it will closely monitor the progress of monetary policy normalization by the US Federal Reserve, conditions related to trade with major countries, the directions of the new government's economic policies, the trend of increase in household debt, and geopolitical risks.




Thursday May 11 2017
South Korea Jobless Rate Up To 4.0% In April
Statistics Korea | Rida Husna | rida@tradingeconomics.com

South Korea’s seasonally adjusted unemployment rate increased to 4.0 percent in April of 2017 from 3.7 percent in March.

The number of unemployed persons went up by 75 thousand to 1,098 thousand and employment went down by 111 thousand to 26,511 thousand people.

A year ago, the jobless rate was 3.7 percent.

On an unadjusted basis, the unemployment rate stood at 4.2 percent. The labor force participation rate rose to 63.5 percent from 62.8 percent. 


Monday May 01 2017
South Korea Annual Inflation Returns To Target
Mario | mario@tradingeconomics.com

South Korea’s inflation rate slowed to 1.9 percent in April of 2017 from 2.2 percent in the previous month, slightly below expectations of 2.0 percent. The inflation rate returned to the central bank target of 2.0 percent after surpassing it in March for the second time in 4.5 years. The result was mainly explained by softer growth in prices of food & beverages and transport. On a monthly basis, consumer prices decreased by 0.1 percent.

Prices increased at a softer pace for food & non-alcoholic beverages (2.6 percent from 3.5 percent in March), clothing & footwear (0.2 percent from 1.2 percent), health (0.7 percent from 1.1 percent), furnishings & household equipment (0.9 percent from 1.0 percent), transport (5.4 percent from 6.4 percent), restaurants & hotels (2.2 percent from 2.3 percent), and miscellaneous goods & services (2.5 percent from 2.8 percent). Also, communication prices decreased 0.3 percent after rising by 0.2 percent in the previous month.

In contrast, prices increased at a faster pace for liquor & tobacco (1.5 percent from 1.4 percent in March) and recreation & culture (1.9 percent from 1.0 percent).

Meanwhile, inflation rate was steady at 1.1 percent for utilities and at 1.3 for education. 

On a monthly basis, consumer prices retreated 0.1 percent after remaining unchanged in March.


Monday May 01 2017
South Korea Posts Largest Trade Surplus On Record In April
Rida Husna | rida@tradingeconomics.com

South Korea's trade surplus rose to USD 13.25 billion in April of 2017 from USD 8.70 billion a year earlier. It was the largest trade surplus on record, as exports increased more than imports, preliminary data showed

Year-on-year, sales  surged 24.2 percent from a year earlier to USD 51.01 billion, following a 13.7 percent in the prior month. It was the sixth straight month of growth and the fastest in almost six years, due to a surge in the exports of semi-conductors (56.9 percent) and ships (102.9 percent). Sales also rose for petroleum products (25.6 percent), vehicles (11.6 percent) and flat screens (10.2 percent). In contrast, exports declined for wireless devices (-12.8 percet) and autoparts (-10.4 percent)

Exports to China rose 10.2 percent, marking a double digit growth for a fourth month in a row. Meantime, outbound shipments to the EU countries jumped 64.9 percent, the most since early 2011. Also, sales to Japan (23.8 percent) and the US went up by 3.9 percent.

Imports rose 16.6 percent to USD 37.75 billion, compared to a 26.9 percent gain but below forecast of a 21.0 percent rise.

In March 2017, the trade surplus was downwardly revised to USD 6.27 billion.

For 2017, exports are expected to increase 2.9 percent, supported by improving global demand, while imports are projected to grow at a faster 7.2 percent. 

The trade balance has been in consistent surpluses since February 2012.