South Korea's index of industrial production rebounded 3.2 percent on the month in May after falling an upwardly revised 0.6 percent in April and rising 4.7 percent in March. It was much stronger than the median forecast of a 1.0 percent drop. The index fell 7.3 percent from a year earlier after slumping a downwardly revised 9.0 percent previously.

Within the industrial sector, manufacturing output made similar moves, up 3.2 percent on the month after a 0.6 percent dip and down 7.5 percent on the year following a 9.2 percent decline.

Aggregating across all industry, output rebounded 1.3 percent on the month in May after falling 1.3 percent in April while posting the second straight year-over-year drop, down 0.9 percent after a 1.0 percent dip.

South Korea's manufacturing purchasing managers' index (PMI) data released earlier this month showed the index edged up from 48.1 in April to 48.4 in May, but remained below the 50.0 no-change mark, indicating the 11th consecutive monthly deterioration in the health of the manufacturing sector and one that was moderate overall.

Industrial production is expected to decrease 1.0 percent on the month in May versus a 1.2 percent decrease in April. Year-over-year contraction is seen at 7.7 percent versus 8.9 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.