Industrial output edges up in March on robust chip production

South Korea’s industrial output edged up in March from the previous month, supported by strong semiconductor production, despite lingering weakness across other sectors, data showed Wednesday.

Industrial production rose 0.9 percent last month, marking the second straight month of growth following a downturn that began in September, except for a brief uptick in December, according to the data compiled by Statistics Korea.

In contrast, retail sales, a key gauge of private spending, inched down 0.3 percent from a month earlier in March.

Facility investment also declined by 0.9 percent in March, following a sharp rebound in February.

The modest rise in industrial output was largely driven by gains in the mining and manufacturing sectors, which saw a 2.9 percent increase from the previous month.

In particular, semiconductor production surged 13.3 percent on-month in March, marking the largest increase in 19 months since August 2023, when it rose by 13.6 percent.

Pharmaceutical production rose 11.8 percent, while output of electronic components increased by 7.8 percent.

On a yearly basis, overall industrial production rose 1.3 percent in March.

Retail sales presented a mixed picture.

Sales of durable goods and semidurable goods, including clothing, climbed 2.8 percent and 2.7 percent on-month, respectively. However, sales of home appliances fell sharply by 8.6 percent.

Compared with the same month last year, retail sales advanced 1.5 percent.

The construction sector showed signs of deterioration, with output down 2.7 percent on-month after a brief rebound in February.

Construction orders declined 8.7 percent from the previous month, extending their losing streak to 11 consecutive months.

“Retail sales and facility investment showed some weakness, which appears to be a correction following February’s increase,” Lee Doo-won, an official from the agency, said.

He noted the strong performance in the semiconductor sector, but urged caution due to ongoing uncertainties surrounding recent U.S. tariff measures.

“As far as production volume is concerned, there does not appear to be any immediate impact from the tariffs,” he added.

The ministry noted that domestic factors, such as eased political tensions and the planned supplementary budget, could play a positive role, yet external uncertainties persist.

The ministry said that the government will move swiftly to engage in tariff negotiations with the United States, support affected domestic companies and expedite the passage of the supplementary budget.

Particular attention will also be paid to the sluggish construction industry by reviewing the cause of the prolonged downturn and exploring fundamental strategies for revitalization.