The Ministry of Strategy and Finance and the National Statistical Office said yesterday that demand for clothes, fine dining, new homes and cars has been falling rapidly since the global financial crisis began invading the real economy in November.

Government data revealed that average consumer spending in these categories plunged 7 percent in December compared to the previous year, making it the sharpest fall since the 1997-98 Asian financial crisis.

Experts attribute the consumption slump to households that have become more frugal, scared by possible pay cuts and job losses.

"We know that the nation's key economic indicators are not too pleasant, but it is the first time since the 1997 Asian financial crisis that demand for dining out, apparel and homes has been this bad," an unidentified Finance Ministry official was quoted as saying by the Yonhap News agency. "Private spending is slowing more quickly than the government has been predicting."

New clothing items have been selling briskly during sound economic times, but the recession has forced consumers to push purchases to the bottom of their spending list. Experts noted that even the relatively colder winter months this year had prompted some households to settle for used clothing.

Data showed that sales of household textile goods and clothing in December had merely totaled 2.83 trillion won ($2.06 billion), the first time the December figure had fallen below 3 trillion won in three years.

December sales for textile and clothing goods plunged 18.2 percent compared to the previous year. It was also the worst since the government began compiling such data in January 2006.

Demand for shoes and purses has also taken a big hit, with December sales recording negative growth of 11.5 percent compared to a year earlier.

More and more households have also opted to dine at home rather than out. The productivity of eateries in the fourth quarter of 2008 fell 5.6 percent, the worst performance since the government began compiling such data in 1999.

Sales of new homes, cars and furniture have also been thrown into the dark. In December, the number of apartment sale deals in December touched 57,000 units, a drop by nearly half compared to the total of 116,000 recorded the previous year.

Just in Gyeonggi Province, apartment sales hit close to 10,000 units in December, a more than two-fold drop compared to the 22,000 recorded for April 2008.

The slowdown in the housing market has dealt a big blow to the construction industry. Construction orders in November plunged by 47.7 percent compared to the previous year.

Car production in December fell 26 percent compared to the previous year, while shipments declined 25.7 percent.

Sales of new cars in November contracted 28.4 percent compared to a year earlier. Generous discount promotions, however, led to a slight pickup in December with a 7.1 percent rise in sales compared to the previous year.

Coming into the new year, production of new cars in January nosedived by 48.4 percent compared to a year ago to total 189,360 units. The figure is the worst since a workers' strike in July 2006 hampered production.

By Yoo Soh-jung

(sohjung@heraldm.com)

2009.02.10