South Korea's index of industrial production fell 1.3 percent on the month in January after a fall of 0.5 percent in December, while year-over-year growth accelerated from 6.1 percent to 12.9 percent. Within the industrial sector, manufacturing output fell 1.4 percent on the month after a previous decline of 0.6 percent, with year-over-year growth picking up from 6.6 percent to 13.7 percent. Previously published PMI survey data showed stronger conditions in the manufacturing sector in January, with data for February due to be published later today.

Activity was mixed in other key sectors. Service sector output rose 0.1 percent on the month in January after increasing 1.1 percent in December, while construction sector activity surged 12.4 percent after a previous decline of 2.9 percent. Output in the public administration sector fell 0.7 percent after a previous increase of 0.8 percent. Aggregating across all sectors, output rose 0.4 percent on the month, as it did previously, with year-over-year growth accelerating from 0.4 percent to 7.3 percent.

Strong year-over-year growth in industrial production largely reflects the timing of lunar new year holidays, which occurred in January last year but in February this year. This means the number of working days - and, as a result, the volume of output as well - were somewhat lower than they otherwise would have been in January 2023 but were at more normal levels in January 2024. Similarly, working days and output were at more normal levels in February 2023 but lower than they otherwise would have been in February 2024.

Industrial production is expected to increase 1.0 percent on the month in January on top of a 0.6 percent rise in December that followed a 3.3 percent jump in November.

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.