SEOUL (Reuters) - South Korean exports rose in January for a third consecutive month and at the fastest pace in nearly five years, preliminary data showed on Wednesday, handsomely beating expectations.
The news will offer some hope for policymakers struggling with uncertainties ranging from U.S. President Donald Trump’s proposed trade policies to political risks at home.
Wednesday’s news was not all good, however, with a survey showing South Korea’s manufacturing activity contracted for a sixth straight month in January on quickening declines in output and new orders.
The Nikkei/Markit Purchasing Managers’ Index (PMI) for South Korea’s manufacturing sector fell to 49.0 in January from 49.4 in December.
Production at South Korean manufacturers also declined for a sixth straight month due to unstable economic conditions and weak demand, prompting some companies to cut back further on staffing.
Although January’s headline reading stayed below 50, it was not far from December’s reading which was the highest since July last year, mainly thanks to global demand for exports.(The 50-point mark separates contraction from expansion in manufacturing activity during a month.)
The sub-index on new export orders stood at 50.2 in January, slowing from 51.6 in December, while overall new orders from home and abroad contracted for an eighth straight month, albeit at a marginal pace.
Shipments from South Korea leapt 11.2 percent in January from a year earlier to $40.33 billion, the biggest jump since a 20.4 percent increase in February 2012, data from the Ministry of Trade, Industry and Energy showed.
Imports rose at a faster 18.6 percent to $37.13 billion, resulting in a trade surplus of $3.2 billion. The surplus for January was smaller than December’s $6.8 billion because of robust growth in imports.
Economists polled by Reuters had forecast South Korea’s exports to rise 8.7 percent last month, while imports were seen rising 8.5 percent.
“With a rebound in international oil prices, (South Korea‘s)export prices have been rising,” Stephen Lee, an economist at Meritz Securities said after the data was released.
“There is a need to see if exports volume also expanded accordingly, for incidence from chemical sectors, to see if overall (trade) growth is set to continue,” Lee said.
Shipments to China and the European Union expanded by 13.5 percent and 13.4 percent each, while exports to the United States declined by 1.8 percent year-on-year.
Shipments of petroleum products and semiconductors surged 67.4 percent and 41.6 percent from a year ago respectively.
Higher prices for memory chips and growing use of semiconductors in smartphones boosted export earnings.
Samsung Electronics Co Ltd (005930.KS), the world’s biggest maker of smartphones and memory chips, reported a 50 percent jump in fourth quarter operating profit last month, thanks to record earnings in its chips business. Shipments of semiconductors reached a monthly record of $6.41 billion, Chae Hee-bong, a trade ministry official, told a news conference.
Factory output for December, released an hour before the trade data on Wednesday, showed production unexpectedly fell by a seasonally adjusted 0.5 percent, short of the median forecast of a 0.3 percent increase seen in the Reuters survey.
November’s output reading was revised to a 3.6 percent increase from a provisional 3.4 percent jump reported earlier.
Production of electronic components and transportation equipment fell 5.5 percent and 6.2 percent respectively from a month earlier, pulling down the overall index.
Consumer sentiment has plunged to multi-year lows as the country grappled with a political scandal involving President Park Geun-hye, who was impeached by parliament in December. Wednesday’s data showed retail sales fell 1.2 percent that month from November to mark the fastest drop since September 2016.
A finance ministry official noted December’s fall in output followed an unusually steep jump in November when output rose at its fastest clip in more than seven years.
Services sector output in December posted a mild increase, rising 0.3 percent from a month earlier after a similar gain in November.
From a year earlier, industrial output rose 4.3 percent in December after a revised 5.3 percent jump in November. The reading was above a 3 percent rise forecast in the Reuters survey.
Reporting by Cynthia Kim and Christine Kim; Additional reporting by Dahee Kim; Editing by Richard Pullin and Eric Meijer