Monthly production data for South Korea show manufacturing weakened sharply in February, with conditions stronger in other sectors of the economy. Previously published PMI survey data showed that the manufacturing sector contracted for the eighth consecutive month in February, with PMI data for March due to be published early next week.

South Korea's index of industrial production fell 3.2 percent on the month in February after advancing 2.4 percent in January. The index fell 8.1 percent on the year after a previous decline of 13.0 percent. Within the industrial sector, manufacturing output fell 3.1 percent on the month after a previous increase of 2.7 percent and fell 8.2 percent on the year after dropping 13.6 percent previously.

Growth improved in other key sectors. Output in the public administration sector rebounded strongly, up 5.8 percent on the month after dropping 5.4 percent previously, while service sector output rose 0.7 percent after a previous decline of 0.5 percent. Construction output rose 6.0 percent after advancing 4.9 percent previously. Aggregating across all industry, output rose 0.3 percent on the month in February after an increase of 0.1 percent in January, with year-over-year growth picking up from a drop of 1.3 percent to an increase of 2.9 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.