Production, consumption and investment all declined month-on-month last month, recording a "triple decline." This was driven by a sharp drop in automobile production and sales due to fewer working days during the vacation season. With investments in ships and aircraft also falling, key indicators dropped across the board for the first time in three months.
According to the "August 2026 Industrial Activity Trends" (preliminary) released by the National Data Agency on the 30th, total industrial production decreased by 1.3% month-on-month last August (the same standard applies hereinafter). It increased by 1.9% year-on-year. Retail sales and equipment investment fell by 1.8% and 9.5%, respectively. This marks a triple decline for the second time in three months, following May. The Data Agency analyzed that this is a temporary trend caused by reduced working days, noting that future trends need to be monitored.
Manufacturing production decreased by 4.8%. While production increased in machinery and equipment (3.1%), it fell in automobiles (-24.8%) and rubber and plastics (-11.0%). Specifically, as summer vacations concentrated in August, working days decreased, leading to a drop in finished vehicle production. Automobiles recorded their largest decline in six years and six months since February 2020 (-28.9%). Due to the decrease in finished vehicle production, plastic products for transportation equipment, tires and tubes also declined together.
Service industry production increased by 0.5%. While production decreased in wholesale and retail trade (-0.7%), it increased in information and communications (4.7%) and professional, scientific and technical services (2.3%).
Retail sales, which represent goods consumption, decreased by 1.8%. Sales increased in semi-durable goods such as clothing (0.4%), but decreased in durable goods such as passenger cars (-4.5%) and non-durable goods such as food and beverages (-1.6%). This marks a second consecutive month of decline.
By business type, specialized retail stores (4.1%) increased, while large marts (-5.9%), passenger car and fuel retail stores (-6.9%), department stores (-6.4%) and convenience stores (-0.9%) decreased. Due to the drop in automobile production, passenger car consumption (-13.6%) recorded its largest decline since January 2024 (-14.6%). Consumption is divided into goods consumption and service consumption, but industrial activity trends only cover goods consumption.
Equipment investment decreased by 9.5%. While investment increased in machinery such as semiconductor manufacturing equipment (1.6%), it decreased in transportation equipment including other transport equipment (-32.8%) due to reduced investment in ships and aircraft.
Construction output increased by 1.9%. While construction performance decreased in civil engineering (-3.9%), it increased in building construction (4.5%). Both non-residential buildings such as semiconductor factories and residential buildings such as apartments increased, reversing to growth one month after turning to a decline (-1.0%) in July last month. Year-on-year, this marks a shift to growth for the first time in 28 months.
The cyclical variation of the Coincident Composite Index, which indicates current economic conditions, rose by 0.5 points to 101.7. The cyclical variation of the Leading Composite Index, which predicts future economic trends, fell by 0.1 point to 104.2. This marks a shift to decline for the first time in 10 months since October last year. This was influenced by factors such as rising import-export price ratios and falling KOSPI and construction order values.
Lee Doo-won, Economic Trends Statistics Review Officer at the Data Agency, said, "It appears that the sluggishness in the automobile sector has commonly affected production, consumption and investment." He added, "In retail sales, non-durable goods such as food and beverages decreased. However, since there were also temporary trends such as reduced working days due to the concentration of automobile vacations, it is necessary to observe economic trends further."
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