September Industrial Production Up 3.0%, Biggest Gain in 15 Years and 6 Months
Korea's industrial production rose 3.0% in September from the previous month, marking the largest monthly gain in 15 years and 6 months. According to September industrial activity data released by the National Data Agency on the 30th, consumption and investment also rebounded, though consumption remained weak on a quarterly basis.
According to the agency's "September 2026 Industrial Activity Trends" released on the 30th, the all-industry production index (seasonally adjusted, 2020=100) stood at 122.7, up 3.0% from the previous month. This is the largest increase since March 2011 (3.4%), or in 15 years and 6 months. All-industry production rose 2.6% in June and 0.1% in July, fell 1.2% in August, then rebounded sharply in September.
The production rebound was led by semiconductors and automobiles. Mining and manufacturing output rose 9.0% from the previous month, with manufacturing production up 9.9%. By sector, semiconductor production jumped 19.2% and automobile production surged 39.9%. Automobile output recovered as production disruptions from the August strike and summer vacation were resolved. The average operating rate for manufacturing also rose to 76.8%, up 5.6 percentage points from the previous month.
Consumption and investment grew as well. The retail sales index rose 3.6% and facility investment climbed 5.3% in September, achieving a "triple increase" in production, consumption, and investment. It was the first time in three months, since June, that all three indicators rose together.
September retail sales rose 3.6% from the previous month, breaking out of the declines seen in July (-2.5%) and August (-1.8%). However, the third-quarter retail sales index fell 1.0% from the previous quarter, marking a second straight quarterly decline after the second quarter (-1.8%). In the Bank of Korea's third-quarter real gross domestic product (GDP) advance estimate released on the 27th, private consumption also fell 0.2% from the previous quarter. The economy grew 1.0% over the same period.
Investment showed a contrasting trend. Facility investment rose 5.3% in September from the previous month and 10.1% from a year earlier. Investment in machinery rose 4.7% and transport equipment 7.4% month-on-month, while machinery investment, including semiconductor manufacturing equipment, surged 22.2% year-on-year, underpinning overall facility investment. Third-quarter facility investment also rose 6.3% from the previous quarter.
Construction investment has yet to show a clear recovery. September construction completion value rose 5.8% from the previous month, with architectural and civil engineering works up 5.1% and 7.4% respectively, but fell 1.6% from a year earlier. Construction orders jumped 49.8% year-on-year, driven by gains in architectural sectors such as factories and warehouses and civil works such as railways and rail transit.
Coincident and leading business indicators also diverged. The cyclical component of the coincident composite index, which reflects current conditions, rose 0.5 points to 102.2, while that of the leading composite index, which signals future conditions, fell 0.1 points to 104.1. Declines in the KOSPI and the yield spread between long- and short-term rates were found to have affected the leading index.
