Construction Orders Fall to New Low



By Lee Hyo-sik
Staff Reporter
Domestic construction orders dropped by 39.2 percent to 4.16 trillion won ($3.61 billion) in August from the same month last year, the steepest decline in 65 months since March 1999, falling in both the public and private sectors.



Orders previously fell 3.3 percent in July and 36.9 percent in June over the corresponding periods last year, according to the National Statistical Office (NSO) Monday.
The decline is said to be due largely to various government regulations designed to clamp down on real estate speculation on apartments and commercial buildings, which has adversely affected construction business activities.

NSO officials said that the sharp drop in construction orders is likely to cloud prospects for next year since the construction industry accounts for 17 percent of the domestic economy, adding that construction orders are not likely to pick up in the near future.

The concurrent business indicator, reflecting current business conditions, has dropped for the last four months, with 123.3 in August, down from 123.9 in July, 124.3 in June, and 124.5 in May.

The leading business indicator, a barometer of business conditions six months in the future, was at 111.5 in August, unchanged from the previous month after falling from 111.7 in June, 111.9 in May, and 112.1 in April.

Due to the continuing slump in domestic demand, whole and retail sales declined by 1.5 percent in August over the corresponding month last year, also down 1.2 percent from the previous month, casting a shadow over economic prospects for coming months.

Meanwhile, industrial output jumped by 10.6 percent in August from the same month last year as semiconductor production increased by 38.8 percent and automobile production by 24.9 percent in August over the corresponding period last year, thanks to relatively high demand from overseas consumers.

Output growth was the lowest since January, indicating that the country has not yet reached the long-awaited pick up in economic activity.

Inventories were unchanged from July with 3.5 percent in August, but higher than the 3.1 percent of June.

Factories were running at an average capacity of 78.7 percent in August, down from 79.7 percent in July, while business investments jumped by 2.3 percent in August over a year ago and 5 percent from July.

NSO Director General Kim Min-kyung said that various data indicated the economy was in a period of decline, but said it is premature to conclude that the economy is losing steam after a short rebound, which is technically called a double dip. ``We must wait until the September data comes out,’’ she said.

She predicted exports and the operating capacities of factories would improve in September.

Another NSO official said the fall harvest holiday, or Chusok, had little positive effect on the economy when the statistics were taken, but hoped this would change in the September report.

leehs@koreatimes.co.kr