Monthly production data for South Korea show manufacturing rebounded sharply in January, with conditions mixed in other sectors of the economy. Previously published PMI survey data showed that the manufacturing sector contracted for the seventh consecutive month in January, with PMI data for February due to be published later today.

South Korea's index of industrial production rose 2.9 percent on the month in January after falling 3.1 percent in December, while year-over-year growth weakened from a fall of 10.5 percent to a decline of 12.7 percent. Within the industrial sector, manufacturing output increased 3.2 percent on the month after a previous decline of 3.6 percent and fell 13.2 percent on the year after dropping 11.1 percent previously.

Growth was mixed in other key sectors. Output in the public administration sector fell 5.9 percent on the month after dropping 0.4 percent previously, likely reflecting the impact of lunar new year holidays. Service sector output growth also slowed to just 0.1 percent after a previous increase of 1.5 percent. Construction output, in contrast, rebounded with an increase of 1.8 percent after falling 0.7 percent previously. Aggregating across all industry, output rose 0.5 percent on the month in January after no change in December, with year-over-year growth weakening from an increase of 0.7 percent to a fall of 0.8 percent.

The industrial production index measures changes in the volume of industrial production with respect to the base year. The index charts the growth in production of each major industry and of the manufacturing sector. Industrial Production measures the physical output of the nation's factories, mines, and utilities. Factories manufacture various products, and the industrial production indexes have been prepared as a comprehensive indicator of wide-ranging production activities for such products and are regarded as some of the most important among economic indexes.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

Industrial production provides key industry data for export-dependent economies. It is highly sensitive to the business cycle and can often predict future changes in employment, earnings and income. For these reasons industrial production is considered a reliable leading indicator that conveys information about the overall health of the economy. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Detailed data in the report shows which sectors of the economy are growing and which are not.