September Production & Investment Increase on Semiconductor Boom... Retail Sales Decline for Second Consecutive Month

All-Industry Production Up 1.0%, Facility Investment Up 12.7%... Semiconductor Production Sees Largest Increase in 2.5 Years ↑

Third Quarter Retail Sales Hit Largest Increase in 4 Years Driven by 'Consumption Coupon Effect'… Government "Economic Improvement Trend Continues"

Trends in Industrial Activity in August 2025 (Sejong = Yonhap News) Reporter Bae Jae-man = Lee Doo-won, Economic Trends Statistics Commissioner at Statistics Korea, explains the trends in industrial activity for August 2025 at the Government Sejong Complex on September 30. 2025.9.30 scoop@yna.co.kr

Driven by a robust semiconductor market, September's industrial production and facility investment indicators showed an increase.

However, retail sales, which reflect consumption trends, continued to decline for the second month in a row.

[GRAPHIC] Trends in Industrial Activity Increase/Decrease (Seoul = Yonhap News) Reporter Won Hyung-min = According to the 'August Industrial Activity Trends' released by Statistics Korea on the 30th, the retail sales index decreased by 2.4% compared to the previous month.

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◇ Semiconductor Production Sees Largest Increase in 2.5 Years… Semiconductor Equipment Investment Also Up 28.0% ↑

According to the 'September Industrial Activity Trends' released by the National Data Office on the 31st, the all-industry production index (seasonally adjusted) stood at 115.5 (2020=100), a 1.0% increase from the previous month.

Industrial production has been fluctuating monthly, with declines in April-May, increases in June-July, and a 0.3% decrease in August.

Mining and manufacturing production decreased by 1.2%, with an increase in semiconductors but a decline in automobiles.

Semiconductor production (19.6%) saw its largest increase in two years and six months since March 2023 (26.5%).

Conversely, automobile production (-18.3%) experienced its largest decrease in five years and four months since May 2020 (-23.1%), during the COVID-19 pandemic. The Data Office analyzed that the significant base effect from a 21.2% increase in August contributed greatly.

Lee Doo-won, Economic Trends Statistics Commissioner, explained, "It appears to be a dip due to the base effect from the significant increase in August," adding, "Overall, both domestic and export markets for automobiles are not bad, and the overall volume seems to be decent."

Construction industry production increased by 11.4%, leading the rebound in overall industrial production.

Service industry production also rose by 1.8%, marking the largest increase in two years and seven months since February 2023.

Within this, wholesale and retail trade increased by 5.8%, the largest jump in seven months since February.

Financial and insurance services production also increased by 2.3%, likely due to the booming stock market, with the KOSPI index surpassing 4,000.

Public administration production decreased by 1.2%.

On a quarterly basis, third-quarter industrial production increased by 1.1%, showing the largest growth in eight quarters.

September investment indicators also showed strength.

Facility investment increased by 12.7% compared to the previous month. Notably, investment in equipment for semiconductor manufacturing surged by 28.0%. Investment in other transportation equipment, such as imports of ships and aircraft, also saw a sharp increase.

Construction investment also appears to be recovering from its low point.

Construction work completed (constant prices) increased by 11.4%, the largest rise in 20 months since January last year (21.8%). Building construction increased by 14.8% and civil engineering by 2.9%. Construction orders (current prices) decreased by 8.6% year-on-year.

Lee Doo-won, Commissioner, explained, "Due to the strong performance of the semiconductor industry itself, related construction performance increased."

Automobile Tariffs Also Reduced to 15% (Pyeongtaek = Yonhap News) Reporter Hong Ki-won = Export automobiles are parked at Pyeongtaek Port in Gyeonggi Province on the 30th.

Korea and the United States agreed in July for the U.S. to lower its tariff on Korean automobiles from 25% to 15%, and for Korea to invest approximately $350 billion in the U.S., but subsequent negotiations have faced difficulties.

On the 29th, Korea and the U.S. agreed on details such as investing $200 billion of the U.S. investment funds in cash, with an annual limit of $20 billion, and specifying the 'commercial rationality' of U.S. investments in official documents.

Under this agreement, the U.S. automobile tariff imposed on Korea is also expected to be lowered from 25% to 15%. 2025.10.30 xanadu@yna.co.kr

◇ Domestic Retail Sales Decrease by 0.1%… Increase of 1.5% in 3rd Quarter, Largest Increase in 4 Years ↑

The retail sales index decreased by 0.1% compared to the previous month, continuing a negative trend for two consecutive months. However, the rate of decrease was significantly smaller than in the previous month (-2.4%).

Sales of durable goods such as communication equipment and computers increased (3.9%), while sales of semi-durable goods such as clothing, shoes, and bags (-5.7%) and non-durable goods such as vehicle fuel (-0.1%) decreased.

The consumption stimulus effect from the distribution of consumption coupons in July appears to have been short-lived, highlighting the structural weakness in domestic demand.

However, on a quarterly basis, third-quarter retail sales increased by 1.5%, the largest increase in 16 quarters since the third quarter of 2021 (2.0%).

This follows a 0.3% decrease in the first quarter and 0% in the second quarter, marking a transition to positive growth.

A Ministry of Economy and Finance official commented, "Due to the effect of consumption recovery coupons, service industry production saw its largest increase in 31 months," adding, "Looking at quarterly trends, the overall consumption and domestic demand improvement trend appears to be continuing."

The composite index of economic activity improved.

The coincident composite index, reflecting current economic conditions, rose by 0.2 points (p) from the previous month, and the leading composite index, forecasting future economic phases, rose by 0.1 points (p).

A Ministry of Economy and Finance official stated, "The significant increase in all-industry production in September, the largest in three months since June (1.6%), reaffirms the economic recovery trend since the launch of the new government," and added, "We will strengthen policy efforts to expand the momentum of economic recovery, including follow-up measures for tariff negotiations and domestic demand stimulation." Yonhap News