South Korea Industrial Output Unexpectedly Falls

South Korea’s industrial production declined 1.9% month-on-month in January 2026, reversing a 1.5% increase in December and surprising markets that had expected a 0.5% rise. The contraction was largely driven by weaker construction and manufacturing activity, which fell 11.3% and 2.1%, respectively. By contrast, private consumption and facility investment posted gains. The weaker-than-expected data cloud the outlook for the country’s economic momentum and underscore ongoing headwinds in the manufacturing sector. On a year-on-year basis, industrial output surged 7.1% in January, accelerating from a 1.4% rise in December and significantly exceeding forecasts of 2.2%.

South Korea’s industrial production rose 0.5% year-on-year in 2025, marking the slowest pace of growth in five years, as gains were largely supported by strong semiconductor demand. In December, industrial output increased 1.7% month-on-month, the strongest rise in four months and well above market expectations of a 0.5% increase. The monthly rebound was driven by a pickup in semiconductor production amid inventory restocking and firmer external demand, while output in the automobile and machinery sectors stabilized following earlier disruptions. On a year-on-year basis, industrial output fell 0.3% in December, improving from a 1.4% decline in November and coming in better than forecasts for a 2.1% drop.

South Korea’s industrial production rose 0.6% month-over-month in November 2025, recovering from a revised 4.2% decline in the previous month, though still falling short of market expectations for a 2.2% gain. The upturn marked the first monthly expansion since August, supported by an improvement in manufacturing activity toward year-end. Output benefited from a pickup in semiconductor production amid inventory restocking and firmer external demand, alongside stabilization in automobile and machinery output after earlier disruptions. On a year-on-year basis, industrial output declined 1.4%, a much slower pace than the revised 8.2% drop in October, suggesting that the downturn in industrial activity may be gradually easing.