South Korea factory output barely rebounds

South Korea's factory output barely gained in November after contracting a month earlier even as exports have boomed for much of the year, supporting broad consensus that the central bank's monetary tightening next year will be gradual. Industrial output gained 0.2 percent in November from October on a seasonally adjusted basis, data from Statistics Korea showed on Thursday, well below the 1.2 percent gain forecast by economists.
In annual terms, factory output in November declined 1.6 percent after a revised 6.1 percent drop in the previous month, as October data was distorted by the national Chuseok holiday. Thursday's data underscores analysts' views that the Bank of Korea will adopt a patient approach to tightening monetary policy over the next year given the soft factory output and subdued price pressure.
"Average factory operation rate didn't improve much in November, and this would safely keep policymakers dovish for a while," said An Ki-tae, an economist at NH Investment & Securities. "Production will improve going forward as exports will support factory output in December and January. But recovery will be rough and uneven," An said.
The BoK raised interest rates for the first time in more than six years to 1.50 percent last month, yet tempered market expectations for further hikes by raising concerns about the job market and other uncertainties. Thursday's data showed the average factory utilization rate came in at 71.3 percent, unchanged from October when output posted its sharpest fall since 2013 in year-on-year terms.
But a sub-gauge measuring overall inventory levels among manufacturers declined 1.7 percent in November, meaning factories managed to push out more of their goods in a sign of improving demand. Output of petrochemical products dropped 5.5 percent from October, offseting a 4.2 percent increase in car production, the Statistics Korea statement showed.
November service sector output gained 2.5 percent from a month earlier, rebounding after declining 1.9 percent in October.