Subscribe
E-Paper
 |
The country's overall output contracted 0.5 percent in May from the month before.
This was mainly because of decreases in the production of metals and materials and in oil refining, the agency said.
Facility investment also dropped 8.2 percent, driven by falling investments in semiconductor equipment, electronics, transportation and construction, it said.
Reflecting these downsides, the manufacturing sector's inventory-to-shipments ratio stood at 118.5 percent in May, the highest since September 1998 when it was 122.9 percent.
This means the country's manufacturers are seeing their inventories growing faster than their products are being shipped out for sale.
To this end, an index measuring the sector's production capacity reached 101.4 points in May, down 0.9 percent from the same period a year ago.
The index has been falling for seven consecutive months, year-on-year.
Analysts say the manufacturing downturn will further affect exports and employment.
"The high ratio indicates the seriousness of our manufacturing," said Kim Doo-un, an analyst at KB Securities. "This is going to hurt the job market and exports even more. And the country continues to face uncertainty over the U.S.-China trade conflict."
About 73,000 people lost manufacturing jobs in May, according to Statistics Korea.
The reasons for continuous job losses in manufacturing include slow innovation, the government's top-down policy approach and increasing labor costs following rapid minimum wage hikes, analysts say.
Manufacturers also are investing more abroad, with Korean overseas direct investment reaching a record $14.1 billion in the first quarter of this year, up 45 percent from a year earlier, according to the Ministry of Economy and Finance.
This record was led by local manufacturers making deals and expanding, especially in the United States amid trade protectionism.
They invested $5.8 billion overseas, up 140 percent in the same period, a record high for the sector.
An index measuring the current phase of the business cycle rebounded for the first time in 14 months, reaching 98.6 points in May, up 0.2 points from the month before.
But the composite leading indicator, projecting the future business cycle, fell by 0.2 points to 98.1 in May after a one-off rebound in April.
A figure below 100 indicates that the economy is slowing and can further negatively affect growth should it further decline.
"With the fall in the leading indicator, we cannot say that the future looks bright," said Kim Bo-kyung of Statistics Korea.
Retail sales, or consumption, increased 0.9 percent in May, mainly due to fuel tax cuts.
The government has extended the cut on fuel taxes to Aug. 31, but lowered it to 7 percent from 15 percent.
This was part of its phase-out program to normalize the prices of gasoline and diesel.
