PRESS RELEASE
May 30, 2011 Regional Economies Analysis Team, Research Department
Regional Economic Developments Update
< SUMMARY >
□ Regional economic activity has remained on an upward trend.
□ Manufacturing production has steadily grown led for instance by semiconductors, automobiles and machinery.
ㅇ Business conditions in the service sector have improved, with the turnaround for example in the transportation and the wholesale & retail industries.
□ Consumption has maintained its pace of recovery, as exemplified by the growth in large retail store sales.
ㅇ Construction activities showed signs of recovery, as reflected in their leading indicators including construction starts and construction orders.
ㅇ Facilities investment has maintained its growth trend amid favorable investor sentiments.
ㅇ Exports remained buoyant, riding on the strengths of such core items as automobiles and ships.
□ The employment situation has continued to improve, with growth in the number of persons employed picking up.
□ Consumer prices exhibited high rates of growth with the prices of agricultural, livestock and marine produce and petroleum products surging and housing prices also rising.
□ Financial institutions' loans and deposits have grown at a faster pace, and corporate fund-raising conditions have generally been favorable.
* This document is produced based upon overall assessment of various
statistical data on the regional economies collected until mid-May this year, and the results of monitoring conducted on 660 businesses and other relevant institutions.
( Overview of Regional Economies: Upward Trends Maintained)
□ Taking into overall account the related statistical data, the results of monitoring, and other factors, the regional economies in Korea are judged to have maintained their upward trends.
( Production )
① Manufacturing production showing steady growth
□ During the first quarter of 2011, manufacturing production* grew steadily, with sectors such as electronic components including semiconductors, audiovisual & telecommunication equipment, automobiles and machinery showing buoyancy
* (Year-on-year growth) 11.5% in Q3 '10 → 12.2% in Q4 → 11.1% in Q1 '11
ㅇ By region, Incheon-Gyeonggi (semiconductors, automobiles), Gwangju-Jeolla (automobiles, chemical products), and Busan- Ulsan-Gyeongnam (machinery, petroleum refining) outperformed other regions.
□ In April 2011, such sectors as semiconductors (owing to the increasing seasonal demand and the profit from decreased Japanese
production) and automobiles (thanks to new model rollouts and expanded exports of parts) were found to have been buoyant.
ㅇ Manufacturers' business sentiment for April came in higher than the first quarter's level
(95 in Q3 '10 → 94 in Q4 → 92 in Q1 '11→ 95 in Apr).
② Trend of improvement seen in service sector business conditions
□ First quarter 2011 service sector business conditions improved, led mainly by the transportation and the wholesale & retail industries.
ㅇ The turnaround in transportation was due to increased freight volumes resulting from brisk exports, while that in the
wholesale & retail industry was caused by the increase in durable goods, such as automobiles, and in department store sales.
ㅇ The restaurant & hotel industry, however, were sluggish due to the effects for example of foot-and-mouth disease and the Great East Japan Earthquake.
□ During April 2011, although the number of Japanese tourists declined as the effect of the Great East Japan Earthquake
persisted, the restaurant & hotel sector improved as outbreaks of foot-and-mouth disease subsided.
ㅇ The business survey index (BSI) on non-manufacturing sector sales for April came in higher than the first quarter's level (88 in Q3 '10 → 89 in Q4 → 84 in Q1 '11 → 89 in Apr).
(Demand)
① Consumption maintains recovery trend
□ First quarter 2011 consumption remained on a recovery track, with sales at large retail stores for example increasing.
ㅇ The pace of sales growth at department stores and large discount stores picked up.
(department stores: 10.1% in Q4 '10 → 11.6% in Q1 '11, large discount stores: 0.4% in Q4 '10 → 3.9% in Q1 '11)
ㅇ Automobile sales rose steeply due mainly to the effects of new model rollouts and launching of new brand names (number of newly registered cars (ten-thousand): 26.0 in Q4 '10 → 30.1 in Q1 '11).
□ In April of this year, automobile sales steadily increased and sales at large retail stores expanded, driven by clothing and food &
beverages.
ㅇ Consumer sentiment in April remained around the benchmark level (110 in Q3 '10 → 109 in Q4 → 104 in Q1 '11 → 100 in Apr, on a nationwide basis).
② Construction activities-related leading indicators improve
□ In the first quarter of 2011, both residential and non-residential new construction starts increased, and construction orders
decreased at a slower pace.
ㅇ New construction starts increased in all regions apart from Daejeon-Chungcheong.
ㅇ In the case of construction orders, both construction (△49.5% in Q4 '10 → △6.8% in Q1 ‘11, year-on-year) and civil engineering construction (△25.6% → △12.4%) diminished at a slower pace.
□ The construction business remained sluggish, although the stock of unsold apartments* has continued to decrease since Jan.2010.
* 117,000 in Jan. 2010 → 98,000 in Sept. → 86,000 in Dec. → 75,000 in Mar. 2011
ㅇ The construction sector’s business sentiment has remained far below the benchmark of 100 (66 in Q3 '10 → 71 in Q4 → 69 in Q1 '11 → 70 in Apr).
③ Facilities investment stays on upward track
□ Facilities investment remained on a growth track in the first quarter this year, boosted by favorable exports and increased domestic demand.
ㅇ Imports of facilities equipment were not disrupted despite the Great East Japan Earthquake.
ㅇ Investment sentiment remained strong, as the facilities
investment BSI continued to exceed the benchmark of 100 (104 in Q3 '10 → 103 in Q4 → 103 in Q1 '11 → 104 in Apr)..
④ Exports remain brisk
□ Exports remained brisk, riding on the strengths of such core items as semiconductors, ships and automobiles.
ㅇ By region, export growth in the Busan-Ulsan-Gyeongnam area and Gwangju-Jeolla area increased at a faster speed than the previous quarter, led by petrochemicals, automobiles and shipbuilding.
ㅇ Exports were found to have kept up a steep growth trend in April as well, as those of petroleum products and shipbuilding increased sharply and those of steel, automobiles and general machinery also showed favorable performances.
(Employment: Improving Trend Shown)
□ The employment situation has continued to improve, as exemplified by the faster growth in the number of persons employed.
ㅇ The number of persons employed in the manufacturing sector continued to increase steadily, while that in traditional service sectors (including the wholesale & retail and the restaurant & hotel sectors) shifted to an increase.
*▪Manufacturing sector (year-on-year, 10,000 persons): 23.5 in Q4 '10 → 23.6 in Q1 '11 → 15.8 in Apr.
▪Wholesale & retail and restaurant & hotel sectors: △0.8 → △1.1 → 1.6
ㅇ The April unemployment rate decreased compared to the first quarter, but remained unchanged on a year-on-year basis (4.4%
in Q1 '10 → 3.0% in Q4 → 3.9% in Q1 '11 → 3.4% in Apr <3.4% in Apr. '10>).
ㅇ The employment rate increased compared to both the same month one year earlier and the previous quarter (56.9% in Q1 '10
→ 58.7% in Q4 → 57.0% in Q1 '11 → 59.3% in Apr <59.2% in Apr.
'10>).
(Inflation and Real Estate Prices)
① Consumer prices rise sharply
□ Consumer price inflation in April this year was above 4%, with steep increases in the prices of agricultural, livestock and marine produce and of petroleum products (3.0% in Q3 '10 → 3.7% in Q4
→ 4.6% in Q1 '11 → 4.3% in Apr, in year-on-year terms).
ㅇ The prices of agricultural, livestock and marine produce had risen sharply due mostly to erratic weather and outbreaks of foot-and-mouth disease, but they then increased at a slower pace in April upon the arrival of spring vegetable shipments
(20.4% in Q4 ‘10 → 17.5% in Q1 ’11 → 9.5% in Apr).
ㅇ The growth in prices of industrial goods including petroleum products also accelerated (2.9% in Q4 '10 → 5.1% in Q1 '11 → 5.8% in Apr).
② Housing prices rise at a faster pace
□ Housing prices have been rising at a faster pace (0.1% in Q3 '10
→ 1.3% in Q4 → 2.6% in Q1 '11 → 1.0% in Apr, in comparison to the last month of the previous quarter).
ㅇ Housing prices in areas other than Seoul and its surrounding areas increased rapidly due mostly to the lack of new homes for occupancy and to factors favorable for regional
development*, and those in Incheon-Gyeonggi shifted to an increase owing chiefly to weakened expectations of price corrections.
* Busan-Ulsan-Gyeongnam: opening of light rail way between Sasang and Gimhae; construction of a financial complex;
etc.
Daejeon-Chungcheong: development of a Napo new town and Sejong City; etc.
Gwangju-Jeolla: construction of the Athlete's Village for 2015 Summer Universiad (a reconstruction project from existing apartment complexes); etc.
Gangwon: improvement in access to the Seoul Metropolitan area; etc.
□ Housing leasehold deposits continued to mark steep rates of
increase, due mostly to a shortage in the availability of small and medium sized apartments for leasing and to the spring moving season (1.3% in Q3 '10 → 2.7% in Q4 → 4.3% in Q1 '11 → 1.3% in Apr, in comparison to the last month of the previous quarter).
(Finance)
① Deposits and loans of financial institutions expand at faster rates
□ During the first quarter of 2011, deposit-taking by financial
institutions rose steeply, led by commercial and specialized banks
(+11.2 trillion won in Q4 '10 → +18.3 trillion won in Q1 '11, in comparison to the last month of the preceding quarter).
ㅇ Deposits taken by commercial and specialized banks increased by a large margin centering around savings deposits - due mostly to shifts of funds out of savings banks (+5.0 trillion won
→ +15.0 trillion won).
ㅇ Deposits taken by non-bank financial corporations grew at slower rates, influenced by concerns about insolvent savings banks (+6.2 trillion won → +3.4 trillion won).
□ Loans extended by financial institutions also increased at faster rates (+12.6 trillion won in Q4 '10 → +13.3 won in Q1 '11, in
comparison to the last month of the preceding quarter).
ㅇ In the case of commercial and specialized banks (+5.8 trillion won → +12.3 trillion won), loans increased significantly led by corporate loans.
ㅇ For non-bank financial corporations (+6.8 trillion won → +1.0 trillion won), loans increased at slower rates due mostly to tightened regulations on project finance loans.
② Corporate financial conditions remain smooth
□ Corporate financial conditions remained favorable overall, as the dishonored bill ratio (0.08% in Q4 '10 → 0.04% in Q1 '11, after adjusting for electronic settlement) stood at a low level and the number of corporate bankruptcies (281 → 193) decreased.
□ The manufacturing sector’s financial conditions BSI decreased (92
in Q4 '10 → 88 in Q1 '11).
