South Korea's industrial production likely to have declined for third consecutive month

South Korea's industrial production is likely to have contracted for the third consecutive month in May, exports and the manufacturing sector should continue to be weak in Q2. 

Exports in May suggested that manufacturing production would be weaker than in April, even after taking into account fewer working days due to three holidays (Labour Day, Children's Day and Buddha's Birthday). Both exports and industry data imply that the key sectors of electronics, autos and chemicals should show zero or negative mom growth, which would lead to a contraction in overall industrial production of 0.7%, estimates Societe Generale. 

Year-on-year growth in industrial production is expected to rise from -2.7% to -1.8% due to base effects, as industrial production fell significantly by 2.5% in May 2014, adds SocGen. Meanwhile, any positive signs in consumption-related indicators (retail sales and service industry production) may be discounted by the anticipation of MERS-driven weakness in June.