Korea industrial production to edge up a measly 0.9%

This forecast is a technical rebound from -1.6% in the previous month.

According to DBS, August industrial production is due tomorrow, and the external trade data will be released next Monday. We expect industrial production to rise 0.9% MoM sa, a technical rebound from -1.6% in the previous month.

Here's more from DBS:

The key indicators including export shipments, PMI and machinery orders didn’t worsen further in August.

That said, the year-on-year growth in exports is expected to remain negative in September.

Although exports increased 7.9% YoY in the first 20 days of September (vs. -12.4% in the same period of August), it was distorted by the holiday effects – the Chuseok holiday fell in early-September last year but end-September this year.

Overall, there is no evident yet to show that a meaningful recovery in exports and industrial activity is underway. In the domestic economy, a modest rebound in consumption demand could be expected in 2H12, on the back of favourable policy measures such as the increases in government spending on social benefits, the cuts of consumption tax on automobiles and expensive electronics.

That said, the property market – an important driver of consumption – remains sluggish. Property transactions and housing prices have continued to slide in August. The prospective property buyers postponed their buying decisions on expectations that housing prices will fall further.

Banks also remained cautious about expanding mortgage loans, owing to concerns about deterioration in asset quality.