SEOUL (REUTERS) - South Korea's industrial production surged at its fastest pace in over seven years in January, driven by a jump in output in the nation's key electronics and semiconductor sectors in a sign of rising economic momentum as exports growth picks up pace.
Manufacturing output rose 3.3 per cent in January from a month ago, Statistics Korea data showed on Thursday (March 2), handily outpacing forecasts for a 0.3 per cent increase and rebounding from a 0.5 per cent decline in December.
It marked the fastest growth in production since a 3.7 per cent rise in September 2009, and backs evidence of a pick up in global demand with data on exports showing solid gains last month.
Production was driven by semiconductors and electronics parts, which jumped 8.8 per cent and 6.7 per cent on-month in January, the data showed.
"Looking at yesterday's trade data, we'll see even better numbers in February," said Moon Jung-hui, economist at KB Investment & Securities, adding he sees more than 4 per cent growth on-month for February.
Moon attributed the strong numbers to falling inventories for petrochemical products, semiconductors, displays and an overall rise in production and product prices.
Industrial production in monthly terms has been largely volatile in the past year, as exports struggled to get a footing.
However, the external picture has started to turn for the better since late last year, with shipments surging at their fastest pace in five years in February and giving a lift to Korea's trade-reliant economy. To support the economy, the Bank of Korea has held its policy rate at a record low 1.25 per cent since June 2016.
On a year-on-year basis, output rose 1.7 per cent, marking a third month of gains, after a revised 4.2 per cent gain in the previous month. Analysts had tipped a 2.6 per cent rise on-year.
A statistic official said the economy was continuing to recover at a mild pace and January production was helped largely by exports and global semiconductor demand.
Service sector output also rose 0.5 per cent in January in seasonally adjusted terms in monthly terms and accelerated from a 0.4 per cent gain in December, in a positive sign for consumption.