By Bae Keun-min
Staff reporter

Despite sluggish investment and consumption, the latest data confirms the economy is showing clear signs of recovery.

The leading index, which forecasts economic trends three to six months in advance, has gained 1.3 percentage points in October over September. It was the fifth consecutive month gain. Another index, called the coincident index, which describes the current economic health, has shown an upturn trend for the past three straight months.

After adjusting for cyclical factors, the index rose 1 point to 100.2 in October from September, surpassing the boom-or-bust line of 100 for the first time since March with 100.7.

According to the National Statistical Office (NSO) said on Friday, a closer look into the data lent growing credence to the view that the economy hit bottom sometime in August and September. Consumption has also risen last month over September, adding optimism to the economic recovery, the NSO said.

The factory-operating ratio hit a 78-month high in October, with production staying on the upturn trend for the past five straight months.

But year-on-year comparisons of consumption and investment showed that it might take time for the economy to recover fully.

The NSO said industrial output grew 7.4 percent last month from a year ago, thanks to strong performances in semiconductor, automobile, and media and telecommunication sectors. Their output rose for the past five consecutive months.

Factories were running at 81.1 percent of their full capacity in October, up 2.3 percentage points from September. The figure marked a record high since April 1997, when it stood at 81.5 percent.

The rise in factory operating ratio, however, reflected low investment in facilities. Investment fell four straight months through October as it dropped 3.8 percent last month over a year ago, marking the longest drop since the consecutive decline during July-October 2001.

Sluggish investment reflected subdued business confidence in the economic outlook and the recent rush into China by Korean companies in search of cheaper wages, an NSO official said.

Consumption, as measured by wholesale and retail sales, fell for the past eight months with a 1.7 percent fall in October over a year ago, marking the longest drop since the 13-month decline registered from December 1997 to December 1998.

But consumption also showed sign of recovery as it rose 1.5 percent from September.

Ex-factory shipments of goods for delivery to the domestic market rose by 0.7 percent last month from a year ago while those for exports jumped 17.8 percent for the period on the back of strong foreign demands for semiconductors and automobiles. Overall shipments rose 6.7 percent.

The NSO provisionally concluded that the economy peaked in August 2000 for the first time since August 1998.

It confirmed the economy also peaked in March 1996 before bottoming out in August 1998.

Since 1970, the economy expanded and contracted in seven cycles. The average boom period was 33 months while contraction averaged 19 months, it said.


kenbae@koreatimes.co.kr