SEOUL (Reuters) – South Korea’s industrial output rose in July at the fastest rate in six months as new model cars came out and Samsung Electronics Co. launched a new smartphone.
Factory output in July gained 1.9 percent in seasonally adjusted terms, official data showed on Thursday, beating market expectations.
Production of cars and electronic components surged 6.5 percent and 9.4 percent respectively from June.
A 1.9 percent gain in monthly terms is the fastest gain since the index jumped 2.8 percent in January this year.
The median forecast in a Reuters survey of analysts was for output to edge up 0.5 percent from June.
Stephen Lee, an economist at Samsung Securities Co. said the data appeared to augur well for economic growth.
“Underlying business sentiment is solid, busier industrial activity points to stronger growth for the third quarter.
“Demand for electronic components seems to be supported by Samsung’s launch of the Galaxy Note 8, while new car launches by Hyundai Motor Co. also boosted car production.”
The June reading was revised to a 0.5 percent fall from a 0.2 percent decline.
South Korea’s industrial output growth this year has been largely uneven and lagging forecasts, prompting fears the manufacturing sector may be losing momentum.
A rebound in consumer demand appears to have offset some of that weakness, with South Korea’s average factory operation rate rising to 73.4 percent in July from 71.2 percent in June.
July’s service sector output was up 0.6 percent from June, posting an increase for two months in a row as consumer sentiment surged to a 6- 1/2-year high for the month. [KRCONS=ECI]
Private consumption growth more than doubled in the second quarter to 0.9 percent from 0.4 percent in the first quarter.
On an annual basis, industrial output gained 0.1 percent, improving from a revised 0.5 percent fall in June.
The data comes just before the Bank of Korea announces a regular decision on monetary policy. The central bank is widely expected to keep interest rates on hold for a 14th straight month at a record low of 1.25 percent.
Reporting by Cynthia Kim and Christine Kim; Editing by Eric Meijer