In March 2025, overall industrial production showed growth for the second consecutive month, primarily due to a significant increase in artificial intelligence (AI) semiconductor production. However, key indicators of domestic economic conditions, including consumption and facility investment, all decreased.
According to the “March Industrial Activity Trends” report released by Statistics Korea on April 30, the all-industry production index for last month was 114.7 (2020=100), a 0.9% increase from the previous month. All-industry production, which had decreased by 1.6% in January this year, showed growth for the second consecutive month, following a 1.0% increase in February. On a quarterly basis, it also increased by 0.2% in the first quarter (January-March) of this year, marking two consecutive quarters of growth.
By manufacturing classification, the semiconductor production index last month reached 201.0, the highest level since related statistics were first compiled. In March, semiconductor production increased by 13.3%, shipments rose by 19.8%, while inventory decreased by 9.9%. Pharmaceutical production also increased by 11.8%, recording the highest growth rate in 10 months. In contrast, production in petroleum refining (-9.3%), machinery and equipment (-3.1%), and metal processing (-2.9%) struggled.
Service sector production decreased by 0.3% over the month, with declines in wholesale and retail, finance and insurance. Compared to the same month last year, industries directly related to people’s livelihoods, such as accommodation and food services (-3.7%) and arts, sports, and leisure-related services (-0.7%), continue to show signs of recession.
The retail sales index, indicating goods consumption, decreased by 0.3%. Durable goods, including communication devices and computers, decreased by 8.6%. This was partly attributed to the base effect from the early payment of electric vehicle subsidies in February and the launch of new products like the Samsung Galaxy S25.
Facility investment last month decreased by 0.9%. While investment in transportation equipment, including automobiles, increased by 3.4%, investment in machinery, including agricultural, construction, and metal machinery, decreased by 2.6%. Construction completed decreased by 2.7%, with declines in both civil engineering (-6.0%) and building construction (-1.5%).
The cyclical component of the composite coincident index, which shows the current economic situation, increased by 0.3 points from the previous month to 98.8. This marks the second consecutive month of increase, following February’s 0.1 point rise. The cyclical component of the composite leading index, which predicts the future economic phase and turning points in the short term, increased by 0.2 points to 100.6, also growing for the second month in a row. However, an official from Statistics Korea cautioned, “It is still premature to discuss a trend reversal in the economy,” warning against overly broad interpretations.
