Tariff Shock Intensifies... Production, Consumption, and Investment All Decrease for the First Time in Three Months

Korea Economic Daily

Summary

It was revealed that due to the United States’ tariff shock, industrial production, consumption, and investment all decreased simultaneously last month.
Key industries such as semiconductors and automobiles both saw weak production, and retail sales and facility investment declined for the second consecutive month.
Although the leading composite index of cyclical variation showed a slight increase, there is uncertainty across overall industrial activity.

The shock from United States tariffs is intensifying. Last month, industrial production, consumption, and investment all declined simultaneously. This is the first time since January this year that production, consumption, and investment—all components of industrial activity—have decreased at the same time in three months.

According to industrial activity trends for April released by Statistics Korea on the 30th, the all-industries production index (seasonally adjusted, excluding agriculture, forestry, and fishing) was 113.5, down 0.8% from the previous month. This marks a return to a downward trend for the first time in three months following January of this year (-1.6%). While all-industries production decreased in January, it increased by 0.7% and 0.9% in February and March, respectively.

By industry, key sectors such as semiconductors (-2.9%) and automobiles (-4.2%) both performed poorly. The service industry production—which reflects service consumption—decreased by 0.1% compared to the previous month.

Retail sales, which indicate commodity consumption, dropped by 0.9%. This marks the second consecutive month of decline following March (-1.0%). Spending on durables such as computers (-1.4%), semi-durables such as clothing (-2.0%), and non-durables (-0.3%) all decreased.

Facility investment was down 0.4% from the previous month, marking two consecutive months of decline after a -0.6% drop in the previous month. Investment in machinery decreased by -4.5%. Construction completed, representing construction firms’ performed work, recorded a -0.7% change, also declining for the second straight month.

The coincident composite index of cyclical variation, which reflects the current state of the economy, rose by 0.2 points from the previous month. The leading composite index of cyclical variation, which predicts future economic phases, climbed by 0.3 points from the previous month.

Kim Ik-hwan Reporter lovepen@hankyung.com