Roundup: S. Korea's industrial output weakens to 22-month low

Industrial output in South Korea weakened to the lowest in 22 months in January due to a fall in auto and machinery production, a government report showed on Monday.

Downbeat industrial activities along with sluggish exports are expected to put pressures on the country's central bank to cut its benchmark interest rate further from the record low level.

Production in all industries, including manufacturing, services, construction and public administration, declined 1.7 percent from a month earlier, according to Statistics Korea.

It was the lowest monthly growth since March 2013 when industrial output reduced 1.8 percent. The industrial activity fluctuated between gains and declines by recording a 0.7 percent fall in September, a 0.4 percent growth in October, a 0.1 percent fall in November and a 1.3 percent expansion in December.

Production in mining and manufacturing sectors dropped 3.7 percent in January from a month earlier. It was the lowest since December 2008 when the global financial crisis hit hardest the South Korean economy.

Output in auto and machinery equipment industries plunged 7.7 percent and 6.8 percent each, leading the January weakness among manufacturers.

Retail sales slid 3.1 percent last month on a monthly basis due to fragile demand for semi-durable goods such as food and beverage. It was the first decline in three months.

Downbeat pictures in both production and consumption are expected to pressure the Bank of Korea to cut its policy rate further from a record low of 2 percent. The bank lowered the rate in August and October last year by 25 basis points each.

South Korea posted an all-time high of trade surplus at 7.66 billion U.S. dollars in February, but it was attributed to faster reduction in imports than exports, boosting worries about the so- called "depression-type surplus."

Exports, which account for about half of the economy, retreated 3.4 percent from a year earlier to 41.46 billion dollars last month. Imports plunged 19.6 percent to 33.8 billion dollars on the back of cheaper crude oil.

The central bank is worried about massive household debts, which continue to break prior records, but the continuation of negative economic indicators would weigh down on the central bank that regularly holds rate-setting meetings every month.

Facility investment tumbled 7.1 percent in January from a month earlier due to fragile demand from auto and general machinery industries.

Construction work completed increased 6.1 percent in January from a year earlier amid strong demand for public works and construction works alike. Construction orders, which reflects outlook for the building industry, jumped 28 percent compared with a year earlier on demand for new homes and offices.

Inventory among manufacturers declined 0.1 percent on-month in January, turning downward in four months. The shipments in the sector slid 3.3 percent, posting the first fall in three months.

The cyclical component of leading economic indicators, which reflects outlook for future business conditions, was up 0.1 point in January from the previous month, with the figure for coincident economic indicators edging up 0.1 percent last month. Endi