South Korea’s industrial output, retail sales and facility investment all fell simultaneously in May from a month earlier, marking the first “triple minus” in 10 months. Exports continued to stay firm, but domestic indicators such as weak consumption indicate a slower recovery than the government’s upbeat outlook.

The government’s official view is that the country’s economy is on a recovery path on the strength of robust exports. But the negative turn of all three key indicators in May suggests signs of a disconnect between the state's outlook and the real economy, or the possibility that the impact of solid exports is yet to trickle down to broader industrial sectors.

Industrial output fell 0.7 percent on-month in May, compared with a 1.2 percent increase a month earlier, according to data released by Statistics Korea on Friday. But industrial output was still up 2.2 percent in May, compared with a year earlier.

On a month-on-month comparison, the output in the mining, manufacturing, gas and electricity industries fell 1.2 percent. The chip sector, which buttresses Korea’s export drive, rose 1.8 percent on-month, marking the first rebound in three months. Higher chip exports led to a 32.8 percent drop in inventory from a year earlier.

But the gains in the chip sector were offset by the output drop in the automobile and machinery sectors, which shrank 3.1 percent and 4.4 percent, respectively. Primary metals also declined 4.6 percent.

The output of the service sector inched down 0.5 percent in May, hurt by a weaker performance in the finance and telecommunications industries.

Retail sales, a gauge of private consumption, edged down 0.2 percent on-month as sales of semidurable goods like clothes fell by 2.9 percent. The demand for nondurable goods, including food, edged up 0.7 percent over the period. Retail sales were down 3.1 percent, even compared with a year earlier.

Facility investment, a closely watched indicator for economic trends, inched down 4.1 percent in May from a month earlier, marking a third consecutive fall. The automobile sector’s facility investment tumbled 12.3 percent, while the machinery sector’s investment weakened 1 percent.

On top of the decline in the three indicators, the cyclical component of the coincident index -- an indicator for current economic conditions -- fell by 0.6 points to 98.8, the biggest decline in 48 months since the onset of the COVID-19 pandemic in May 2020. The cyclical component of the leading index, which forecasts future economic conditions, also inched down 0.1 point to 100.5 -- slightly above the 100 level that suggests a positive business sentiment.

As for the May figures, Kong Mi-sook, a senior official at Statistics Korea, said the overall conditions in the country’s industrial output were still sound, since the figures were still up from a year earlier. But she admitted that consumption remained sluggish.

The Finance Ministry said that the economy in general was still on a recovery path, describing the industrial output drop in May as a “temporary correction.” The ministry also downplayed the industrial output weakness by interpreting the combined figures encompassing both April and May -- rather than looking at the changes in May separately.

Financial officials have maintained an optimistic stance in recent months. For instance, on June 14 the Finance Ministry said in its economic outlook that the increase in incoming tourists and a pickup in the service sector will lead to a recovery in domestic demand, and the economic recovery trend is spreading.

But the overconfidence of government officials about an economic recovery could backfire when their projections are disconnected from the real economy. An objective and balanced outlook, coupled with backup plans, is in order.