South Korea factory output shrinks in September as auto chip shortage bites

SEOUL (REUTERS) – South Korea’s factory output in September declined from August and unexpectedly shrank on a year-on-year basis, ending a 10-month winning streak, as global chip shortages struck car production.

Industrial production last month fell by a seasonally adjusted 0.8 per cent, Statistics Korea data showed on Friday (Oct 29), missing a median 0.3 per cent decline forecast in a Reuters survey. It followed a 0.7 per cent drop in August.

A breakdown of data showed production of cars shrank 9.8 per cent from a month earlier, while that of semiconductors and electrical equipments also slumped 1.6 per cent and 5.2 per cent, respectively.

“September industrial output was weak as global supply chain disruptions were seen weighing on production in the manufacturing industry and on fewer working days (due to the national thanksgiving Chuseok Holiday),” said Oh Chang-sob, an economist at Hyundai Motor Securities.

On an annual basis, factory output unexpectedly contracted 1.8 per cent, missing a 1.4 per cent growth forecast in the poll and down from a 9.7 per cent expansion in August.

Friday’s data also showed the service sector output expanded 1.3 per cent month-on-month in September, while retail sales jumped 2.5 per cent.

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