Current account gained a surplus of $9.30 billion, a slight fall from
$9.75 billion a year ago, still continuing on the trend of large surpluses.
╺ The goods account gained a surplus of $9.35 billion, similar to a year ago ($9.59 billion).
╺ The service account recorded a deficit of $0.34 billion, up from the deficit a year ago ($0.30 billion) due to the reduced surplus in construction account.
╺ The primary income account recorded a surplus of $0.73 billion, larger than a year ago ($0.67 billion), mainly due to the improvement in dividend payment, and the secondary income account recorded a deficit of
$0.44 billion, larger than a year ago ($0.21 billion).
╺ Meanwhile, after seasonal adjustment, current account and goods account recorded surpluses of $7.69 billion and $8.44 billion, respectively, continuing on the trend of large surpluses seen a month ago ($9.81 billion and $11.92 billion, respectively).
Financial account recorded a net outflow of $7.63 billion, up from
$6.24 billion a month ago.
╺ Direct investment account recorded a net outflow of $3.34 billion, up from
$2.16 billion a month ago, due to foreign direct investment turning to a net outflow.
╺ Portfolio investment recorded a net outflow of $3.31 billion, reversing the net inflow in the previous month ($1.66 billion), influenced by foreigners reducing stock purchases and their bond investment turning to a net outflow.
╺ Other investment account recorded a net inflow of $4.45 billion, reversing the net outflow of $5.94 billion a month ago due to loan collection and reduced overseas deposits.
Labor Market: The growth in the number of employed since the second half of 2013 has slowed fast influenced by the Sewol ferry tragedy.
In May, the number of employed only increased 413,000 (1.6%) year-on-year, sharply down from 581,000 (2.3%) a month ago.
╺ Due to ongoing impacts of the Seowl ferry tragedy, the growth of the number of employed in the service sector decreased sharply to 302,000 from 507,000 a month ago; particularly those in wholesale & retail trade (67,000), accommodation
& food service activities (107,000) and arts, sports & recreation related services (-17,000).
╺ Workers in their 50s (227,000) and 60s (182,000) and regular workers (441,000) and daily workers (121,000) continued to act as the driving force behind the rise in the number of employed.
After seasonal adjustment, the labor force (aged 15~64) participation and employment rates recorded 62.0% and 64.8%, respectively, significantly down from the previous month.
╺ Meanwhile, the economically inactive population (-162,000) declined at a sharply decelerating rate, and the unemployment rate recorded a relatively high rate of 3.6%.
Meanwhile, in April, the average nominal and real wages of full-time workers (in workplace with 5 employees or more) recorded relatively low year-on-year growth rates of 2.2% and 0.5%, respectively.
Changes in Employed Persons and Seasonally Adjusted Employment Rate
0 100 200 300 400 500 600 700 800 900
6 9 12 3 6 9 12 3
2012 2013 2014
63.8 64.2 64.6 65.0 65.4 65.8 66.2
Employed Persons(left) S.A . Employment Rate w ith age15-64(right)
(Year-on-Year Change, Thousand Persons) (% )
CPI: Headline CPI inflation continued on a low-growth path to stand at 1.7%, the same as the previous month.
During June, headline CPI inflation showed a diminishing decrease in agricultural product prices and a diminishing increase in industrial goods prices, while a similar increase in other prices, compared to the previous month.
╺ The prices of agricultural products rose -8.9%, a slightly slower decline than -9.9% a month ago.
╺ The prices of industrial goods rose 1.9%, a slower growth than 2.0% a month ago, mainly due to the increased decline in the price of petroleum products and the reduced increase in durable goods prices
╺ The prices of services rose 1.6%, exhibiting a similar increase as the previous month in most areas, a sign of continuing stability.
Core inflation, excluding agricultural and petroleum products, stood at 2.1%, lower than 2.2% a month ago.
The prices for apartment purchase and Jeonse rose 0.0% and 0.2%, month-on-month, respectively, continuing the low growth rate seen since late April.
CPI Changes and Contribution by Sector
-1 0 1 2 3 4
6 9 12 3 6 9 12 3 6
2012 2013 2014
Agricultural Manufacturing Service Electricity, water, and gas
CPI Core CPI
(Year-on-Year, %, %p)
Note: The sums of sector-by-sector contributions are rounded off to the nearest integer, which may be inconsistent with the growth rate of the total index.
Financial Market: In June, the won continued to appreciate and interest rates dropped.
The USD/KRW exchange rate fell 7.2 won from a month ago to register 1,014.4 won in June, influenced by the current account surplus and foreigners’ net stock buying. The JYP/KRW exchange rate registered 1,000.0 won per 100 yen, down by 4.2 won from a month earlier.
KOPSI remained overall stable to close at 2,002.2 as of the end-June, similar to the previous month.
The long-term interest rates dropped influenced by waning concerns about the FRB enforcing the raise in interest rates sooner than expected and by foreigners turning a net buyer of government bonds.
╺ The yields on government bonds (3-year maturity) and AA- corporate bond (3-year maturity) recorded 2.68% and 3.10%, respectively, each down by 14bp from a month ago. Exchange Rate and 3-year Treasury Bond.
Exchange Rate and 3-year Treasury Bond
1,010 1,030 1,050 1,070 1,090 1,110 1,130 1,150 1,170
6 7 8 9 10 11 12 1 2 3 4 5 6
2013 2014
2.4 2.5 2.6 2.7 2.8 2.9 3.0 3.1 3.2
KRW/U SD Exchange Rate (left) 3Yrs Treasury Bond (right) (won) (% )
World Economy: The world economy maintained a moderate pace of recovery, mainly led by advanced economies, despite the expansion of geopolitical risks.
The US GDP growth rate for the first quarter was significantly lower than expected, but the US and euro area showed improvements in their real economic indicators from the second quarter, pointing to a continued moderate recovery in the global economy.
GDP Growth Rates Manufacturing Indices in the US and Eurozone in the US and Eurozone
-4
2011 2012 2013 2014
U S Euro
(Seasonally adjusted at annual rates, % )
40
2012 2013 2014
US ISM Euro PM I
(Base=50)
Emerging markets, mainly leading countries such as China, showed partial improvements in exports and domestic demand indicators, but their major leading indicators have deteriorated, a sign of continued economic slowdown.
Exports Composite Leading Indicators in China, India, and Russia in Emerging Market Economies
-20
2012 2013 2014
China India Russia
(Year-on-Year % Change)
98
2012 2013 2014
China Russia Brazil
(Base=100)
The US GDP growth rate for the first quarter was sharply revised (-2.9%
annualized year-on-year), but a relatively robust recovery is expected from the second quarter on.
╺ The US maintained a recovery momentum with sustaining growth in production and consumption and continuing improvement in the labor market.
US Industrial Production and Retail Sales US Employment and Housing Starts
0
2012 2013 2014
0
Industrial Production(left) R etail Sales(right) (Year-on-Y ear % Change)
5
2012 2013 2014
-10
Employed Persons(left) H ousing Starts(right) (Y oY % Change, 3M A ) (M oM Change, 10 Thousand Persons)
The euro area saw a slight decline in its sentiment index from a month ago, but its production and consumption increased and employment contraction moderated, suggesting a continuing economic recovery.
╺ Meanwhile, a possibility of additional quantitative easing was addressed, as the recovery pace in the euro area remained weak and its inflation stood at a very low level.
Industrial Production and Retail Sales Consumer Confidence and Sentiment Indicators
in Eurozone in Eurozone
-6
2012 2013 2014
-4
Industrial Production(left) R etail Sales(right) (Year-on-Year % Change)
-30
2012 2013 2014
85
Consumer Confidence(left) Sentiment Indicator(right) (Base=100) (Base=0)
Japan showed a decline in exports, mainly in motor vehicles, and sharp slowdown in production, but its sluggish consumption brought by the raise in sales tax turned to improve to some degree.
╺ Its CPI inflation expanded to 3.7% during May, influenced by the raise in sales tax and the increase in energy prices.
Japan's Industrial Production Japan's Export, Import and Retail Sales and Balance of Trade
-15
2012 2013 2014
-5 0 5 10 15
Industrial Production(left) R etail Sales(right) (Year-on-Year % Change)
-3,000
2012 2013 2014
-20
Balance of Trade(left) Ex port(right) Import(right)
(Year-on-Year % Change) (Billion Yen)
China exhibited continuing slowdown in investment growth, but its consumption and exports advanced and sentiment index rose gradually, alleviating concerns about economic downturn to some degree.
China's Industrial Production China's Fixed Asset Investment and Retail Sales and Manufacturing PMI
6
2012 2013 2014
Industrial Production Retail Sales (Year-on-Year % Change)
14
2012 2013 2014
49
Fixed Asset Investment(left) M anufacturing PMI(right) (Base=50) (Year-on-Year % Change)
Some commodity price index, such as CRB, went up from the previous month despite the decrease in grain prices, as international oil prices soared.
╺ International oil prices soared after mid-month due to heightening geopolitical risks related to Iraq, and major forecasting institutions have revised its oil price projections upward.
Prices of Key Raw Materials CRB and Reuters Indices of Commodity Prices
-12
Dubai Copper Aluminum Nickel Corn Wheat
(M onth-on-Month % Change)
26 0
2014 World Economic Outlook (Investment Bank)
0 .5
Global Financial Markets: Despite slowdown in some real economic indicators and geopolitical risks related to Iraq, global financial markets remained stable overall.
During June, long-term interest rates have dropped, influenced by heightened geopolitical risks and the US growth projection being revised downward, but major volatility indices and CDS premium of emerging markets remained at a low level.
Long-Term Interest Rates
in the US, Germany, and Japan VIX and Emerging Market Bond Index
0.0
VIX(left) EMBI(right)
While the dollar turned weak against major currencies, stock prices in major countries went up from a month ago.
Major Currency Revaluation Rates against USD and Changes in Stock Prices (End-May vs. End-June)
- 2