South Korea’s industrial activity hinging largely on overseas semiconductor and refined oil demand retreated in June from a month earlier as the two sectors moderated production for routine repair and inventory clearance, while overall domestic demand recovered in snail’s pace, government data showed.

According to Statistics Korea on Friday, seasonally adjusted mining and manufacturing output slipped 0.2 percent on month in June, reversing from a 0.2 percent gain in May. Against the same period in 2016, it was down 0.3 percent.

Factory activity weakened due to softening in this year’s primary drivers - chip making and refiners. Oil refinery output sank 7.4 percent from the previous month and chip shipments down 3.9 percent.

The slowdown is temporary as oil refiners were undergoing routine repair work, while chip yield was moderated for demand in July, said Ou, Un-seon, head of Short-Term Industry Statistics Division at statistics office.

“Industrial output overall was hurt by the inventory correction, but the upside is bigger than the downside, given steady recovery in exports, improvement in consumer sentiment, and IT and stock market boom,” he said.

As of 1:00 p.m. Friday, the Korean composite stock price index was down 1.4 percent at 2,408.68. The won fell 6.20 won to 1,121.50.

Factory operation averaged at 71.3 percent, slowing from 71.6 percent in the previous month. Inventory shrank 3.8 percent on month.

Capital investment jumped 5.3 percent on month and 18.7 percent on year as the world’s two largest memory chipmakers made heavy investment to ramp up capacity to meet strong overseas demand.

Service sector activity inched up 0.5 percent against the previous month, helped by increase in finance, insurance, and information sectors.

Retail sales - a barometer for private consumption - edged up 1.1 percent on month to mark the largest gain since 3.2 percent in February this year as consumer sentiment was lifted from a series of government measures to incite increases in hiring and income.

By Lee Seung-yoon

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