South Korean Exports Rebound Month-on-Month in the First 20 Days of August, with Accelerating Semiconductor Demand as the Main Driver

Overview

This report interprets South Korea's trade data for the first 20 days of August. Goldman Sachs believes exports rebounded after weakening in the previous month, primarily driven by accelerating semiconductor demand; however, non-technology exports continued to decline and exports to the European Union contracted sharply, indicating an uneven recovery.

Core views

Goldman Sachs stated that, after adjusting for working-day differences, South Korea's average daily exports during the first 20 days of August rose 3.1% month-on-month, compared with -0.2% in the prior month. Cumulative exports through the 20th rose 6.3% month-on-month, reversing the previous month's 5.6% contraction and indicating a recovery in export momentum in early August. The export rebound was primarily driven by technology goods. Technology exports rose 9.5% month-on-month, compared with -1.6% in the prior month; semiconductor exports increased 11.5%, after being nearly flat previously, recording the strongest momentum since May. Other technology exports still declined 4.2%, but the pace of decline moderated from the previous month: a rebound in computer exports was partly offset by sharp declines in mobile phone and home appliance exports. By contrast, non-technology exports declined 1.1%; although this improved from a 6.0% decline in the previous month, lower automobile and auto parts exports continued to outweigh growth in petroleum and steel exports. By destination, exports to mainland China and the United States rose 13.3% and 10.0% month-on-month, respectively, together contributing about 80% of the overall month-on-month increase in exports. Exports to other Asian markets were also strong, rising 6.6% to Japan and 4.8% to Taiwan, China. These gains were partly offset by a sharp 20.3% contraction in exports to the European Union, reflecting significant divergence across regions. On imports, the main text states that cumulative imports through the 20th rose slightly by 1.4% month-on-month, reversing the previous month's 4.6% decline; strong semiconductor imports were partly offset by declines in energy and machinery imports. The report's front-page “key figures” section simultaneously lists working-day-adjusted imports at -2.5% month-on-month, compared with +6.8% previously, which differs from the cumulative-import measure cited in the main text. The unadjusted trade surplus widened from US$12.3bn in the previous month to US$14.0bn.

Analysis framework

The report first uses working-day-adjusted month-on-month export data to identify overall momentum, then breaks down the drivers by technology and non-technology product groups and assesses each destination market's contribution to the overall increase; finally, it combines changes in imports and the trade surplus to summarize trade performance in early August.

Methodology notes

• Industry/sector analysis framework

  Working-day-adjusted month-on-month trade data, broken down by product category and export destination

  The report uses seasonally and working-day-adjusted month-on-month data to assess short-term export momentum and identifies the sources of the overall export rebound through changes in semiconductors, other technology goods, non-technology goods, and destination markets.

Key data

• Average daily exports during the first 20 days of August (working-day adjusted)+3.1% mom saPreviously -0.2% mom sa.
• Cumulative exports through the first 20 days of August+6.3% mom saPreviously -5.6% mom sa.
• Technology exports+9.5% mom saPreviously -1.6% mom sa.
• Semiconductor exports+11.5% mom saPreviously nearly flat, representing the strongest momentum since May.
• Non-technology exports-1.1% mom saPreviously -6.0% mom sa.
• Exports to mainland China and the United States+13.3% and +10.0% mom saTogether contributed about 80% of the overall month-on-month increase in exports.
• Exports to the European Union-20.3% mom saPartly offset growth in other markets.
• Cumulative imports through the 20th+1.4% mom saThe main text states this was -4.6% mom sa previously; rising semiconductor imports were partly offset by declines in energy and machinery imports.
• Working-day-adjusted imports-2.5% mom saThe report's front-page key figures section lists +6.8% mom sa previously.
• Trade surplus (unadjusted)US$14.0bnPreviously US$12.3bn.

Impact & implications

The report believes accelerating semiconductor exports were the main reason South Korean exports shifted from contraction to growth in early August, with demand from mainland China and the United States providing most of the marginal support. At the same time, weakness in non-technology exports and contracting exports to the European Union indicate that export improvement was not broad-based.