South Korea's index of industrial production fell 1.0 percent on the month in June after advancing 3.0 percent in May. This continues the recent pattern of volatility in production, with the index alternating between increases and decreases every month since last December. The index fell 5.6 percent on the year after dropping 7.6 percent previously.

Within the industrial sector, manufacturing output fell 1.1 percent on the month in June after increasing 4.0 percent in May and fell 5.8 percent on the year after a previous decline of 7.9 percent. Previously published PMI survey data indicated that growth in the manufacturing sector contracted for the twelfth consecutive month and at a faster pace in June, with data for July due to be published next week.

Activity was mixed in other key sectors. Service sector output rose 0.5 percent on the month in June after falling 0.3 percent in May, while construction sector activity fell 2.5 percent after advancing 1.1 percent previously. Output in the public administration sector remained solid, up 3.1 percent on the month after increasing 5.6 percent previously. Aggregating across all industry, output rose 0.1 percent on the month after increasing 1.1 percent previously, and rose 1.1 percent on the year after falling 1.1 percent previously.

Industrial production is expected to increase 0.5 percent on the month in June on top of an unexpected 3.2 percent jump in May.

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.