Production and consumption in July showed a slight slowdown, following the triple growth in production, consumption, and investment recorded in the previous month, which created a base effect. In contrast, investment registered its highest increase rate in five months. The government assessed that while retail sales exhibit significant monthly volatility, the trend of consumption recovery continues.
According to the "July 2026 Industrial Activity Trends" released by the Korea Statistics Service on the 31st, total industrial production in July remained flat compared to the previous month (hereafter on the same basis). While the service and construction sectors declined, public administration and manufacturing sectors increased. Compared to the same period last year, production rose by 3.1%.
Retail sales fell by 2.4%, while equipment investment rose by 7.5%. After recording triple growth in production, consumption, and investment in June, all sectors except investment showed sluggish performance. Manufacturing production declined in automobiles (-4.5%) but increased in electronic components (20.7%), primary metals (4.2%), and semiconductors (0.5%), resulting in a 0.2% overall increase. The rise in electronic components was influenced by increased production of OLEDs (organic light-emitting diodes) and printed circuit boards ahead of the launch of new smartphones. Service sector production grew in information and communications (3.5%) but declined in finance and insurance (-4.8%) and professional, scientific, and technical services (-2.7%), leading to a 1.3% overall decrease. This was largely affected by the finance and insurance sector, which saw declines in both stock trading volume and transaction amounts in July.
Retail sales, representing goods consumption, declined across durable goods such as passenger cars (-7.7%), semi-durable goods like clothing (-1.4%), and non-durable goods including cosmetics (-0.1%), resulting in an overall 2.4% decrease. This was partly due to the base effect from a significant increase in durable goods sales in June, following the resolution of supply shortages caused by a fire at an auto parts factory in March. The Statistics Service also noted that the end of the individual consumption tax reduction for automobiles and large-scale home appliance discount events in June contributed significantly to the adjustment in durable goods sales.
Equipment investment increased by 7.5%, driven by growth in transportation equipment (15.4%), centered on other transport equipment such as ships and aircraft, and machinery including semiconductor manufacturing equipment (4.2%). This marks two consecutive months of growth, recording the highest increase rate since February (15.0%)—the largest in five months.
Lee Du-won, an official at the Statistics Service responsible for economic trend statistics, stated, "Transportation equipment increased due to a rise in semiconductor manufacturing equipment over the past two to three months, and July saw similar growth as memory semiconductor production capacity expanded." He added, "Ship investment increased due to improved profitability from rising freight rates amid the Middle East conflict, and facility investments by airlines announced earlier this year also rose."
Construction orders decreased by 1.1%, with civil engineering projects increasing (18.5%) while building construction projects declined (-7.4%). The coincident composite index, which reflects current economic conditions, rose by 0.8 points to 101.2. The leading composite index, used to forecast future economic trends, increased by 0.4 points to 104.2.
The Ministry of Economy and Finance stated, "July industrial activity maintained a favorable production and investment trend despite the large increase in the previous month." It further noted, "Considering the significant monthly volatility, when June and July are viewed together, consumption recovery momentum remains intact, with growth compared to April and May (1.5%) and an expansion in August credit card sales growth rate."
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