South Korea’s industrial output growth likely to have shrunk in July

The South Korean industrial output growth is likely to have shrunk for two consecutive months now. Following a moderate fall in June, the industrial production is expected to have further contracted in July. The USD 41 billion drop in exports in July was a small recovery from the drop of USD 45.2 billion in June. This was mainly due to the usual volatility in shipbuilding sector.

However, the softness in industrial production is expected to have been comparatively restricted, said Societe Generale in a research note. The electronics sector is likely to have corrected following its strong recovery in the second quarter, and this might have been a drag on the overall industrial production.

Meanwhile, auto sector production is likely to have risen considerably in seasonally-adjusted terms, in spite of the concerns of the labor union’s partial strike. Other important sectors such as metals, chemicals and machinery are anticipated to have recorded a weak performance for the second straight month, thanks to subdued exports.

“We expect the underperformance of the manufacturing sector to continue in the current quarter”, added Societe Generale.