Korea's export growth rose by a tame 0.2% in November

But here's why this shouldn't be a big worry.

According to DBS, as the first country in the region to release November’s trade data, Korea reported a slower export growth of 0.2% YoY, compared to 7.2% in the preceding month.

Here's more:

The slowdown shouldn’t be a big worry. The level of exports jumped 13.0% MoM in October to reach a record high of USD 50.5bn, before falling back to USD 47.9bn in November.

Stripping out the seasonal factors, we reckon that the sequential growth in exports has remained solid at 1.5% MoM during the past four months between August and November, markedly higher than 0.4% in the first seven months this year.

Meanwhile, PMI rose to 50.4 in November from 50.2 in October, above the neutral mark for the second successive month, another piece of evidence that a modest recovery in the manufacturing
sector is on course.

Admittedly, investment in the manufacturing industry has not showed a meaningful improvement. Given that export demand is not yet strong and the capacity utilization rate currently remains below its normal level, a recovery in manufacturing investment will still take some time.

The positive news is that investment in the non-manufacturing sectors has started to pick up, boosted by domestic demand. Residential construction investment has increased as a result of the revival in housing market activity. Public investment in the electric power sector has also surged.

The leading indicators including machine orders (74.5% YoY) and construction orders (47.1% YoY) improved sharply in October, signaling stronger investment and better GDP numbers in 4Q.