Korea's finance ministry flags uneven recovery as exports surge, spending sags

South Korea's finance ministry said Friday that the economy is holding to a solid recovery led by a sharp rise in exports, even as industrial output and domestic spending fell in August and inflation stayed near 3 percent.

Exports grew 83.5 percent in September from a year earlier, driven by semiconductors, computers and cosmetics, the ministry said in its October economic report. Average daily exports reached $5.63 billion, more than double the year-earlier level.

That export strength stood against a weaker domestic picture in August. Overall industrial production fell 1.3 percent from the previous month and 1.9 percent from a year earlier, pulled down by a 4.8 percent monthly decline in mining and manufacturing. Construction output rose 1.9 percent on the month and services gained 0.5 percent.

Household spending moved in the opposite direction. Retail sales dropped 1.8 percent from July and 0.3 percent from a year earlier, while facility investment fell 9.5 percent on the month and 16.1 percent from the year-earlier period.

It described the recovery as "solid" but noted that uncertainty from the Middle East war has widened, high oil prices are adding pressure on consumer prices, and employment conditions remain difficult for vulnerable groups and sectors. The ministry said it will strengthen policy efforts to stabilize livelihoods and narrow economic polarization so that the recovery spreads across the broader economy.

Consumer prices rose 2.9 percent in September from a year earlier, easing from a 3.1 percent gain in August, as agricultural, livestock and fishery product prices fell 0.3 percent. Petroleum product prices climbed 14.8 percent, while the core index excluding food and energy rose 2.8 percent.

In the labor market, the number of employed people stood at 29.266 million in September, up 113,000 from a year earlier, while the unemployment rate fell 0.1 percentage point to 2.0 percent. Manufacturing employment rose by 16,000, its first increase in 27 months, and service-sector hiring expanded by 221,000, though construction employment fell by 48,000.

Financial markets showed stock prices rising, the won strengthening against the dollar and government bond yields climbing in September. Home sale and jeonse prices both rose in August.