South Korea's Industrial and Retail Sectors Witness Significant Growth in May
Investing.com - According to recent data, South Korea saw a 3.2% increase in industrial output during May, rebounding from a decline of 0.6% in the previous month. The upturn was primarily driven by the robust performance of key segments including automobile manufacturing and chip production, which grew by 8.7% and 4.4%, respectively.
However, not all sectors experienced growth; service-related industries experienced a slight dip of 0.1%. This decrease was attributed to underperformance within the finance, insurance, accommodation, and restaurant sectors despite gains made within the science and technology fields.
On another positive note for the country's economy - retail sales also rose slightly by 0.4% as consumers spent more on durable goods like home appliances due to warmer weather conditions.
China Likely Faces Third Consecutive Month of Factory Activity Reduction
Recent polls reveal that China may be facing its third consecutive month of contraction in factory activity this June though at a slower pace than before. The official purchasing managers' index (PMI) is projected to have increased marginally from its previous figure but remains below optimal levels.
The Chinese government has set moderate GDP growth targets after falling short last year but acknowledges that significant measures are required to reinvigorate economic development while optimizing structural balance.
While speaking at a World Economic Forum summit recently held in Tianjin, Premier Li Qiang assured attendees that steps would be taken towards boosting demand although he did not specify any new policy initiatives.
Stubborn Inflation Trends Could Upset Federal Reserve Rate Hike Plans
Economic analysts anticipate that inflation will remain persistent according to the Federal Reserve's preferred price-growth measure. This could potentially disrupt expectations about plans concerning interest rates set by the central bank.
Data shows an estimated rise against April figures for both core PCE deflator (a gauge excluding food & energy costs) as well as headline PCE deflator (including food & energy). This comes despite assurances from Fed Chairman Jerome Powell regarding efforts aimed at maintaining inflation close to their target rate.
Powell also hinted at potential changes with regard to fiscal policy based on upcoming economic data releases. This puts further emphasis on forthcoming inflation figures ahead of July’s central bank committee meeting.