Industrial output remains sluggish in August

Korea's industrial output inched up in August from a year earlier, but its growth pace remained subdued on sluggish demand caused by the eurozone debt crisis and concerns over global slowdowns, a government report showed Friday.

According to the report by Statistics Korea, production in the mining, manufacturing, gas and electricity industries grew 0.3 percent last month from a year earlier, slightly improving from a revised 0.2 percent in July.

The output, however, shrank 0.7 percent last month compared with a month earlier, the third consecutive on-month contraction. The country's service sector production increased 0.6 percent on-year in August, but it also declined 0.3 percent compared with the previous month, the report showed.

"Despite increases in the electricity and gas industries, production dropped in August compared with the previous month due to a fall in the mining and manufacturing areas," the report said.

The latest output data comes amid concerns that the Korean economy is facing less demand for its products at home and abroad due to the prolonged eurozone debt problems and worries about the global economic slowdown.

In June, the government cut its outlook for economic growth this year from 3.7 percent to 3.3 percent, citing slowing exports growth as one of the main reasons for the revision.

Earlier in the day, the central bank said that exports, which account for more than half of the economy, also remain sluggish.

Overseas shipments fell 6.2 percent on-year to $42.81 billion last month.

Faltering exports apparently hit the manufacturing industry hard, the report showed.

The output in the manufacturing industry shrank 0.9 percent from a month earlier mainly due to sluggish production of vehicles and machinery equipment, which declined 17.3 percent and 4.7 percent, respectively. Its on-year growth increased a mere 0.3 percent.

The average factory utilization rate in the sector also fell to the lowest level in more than three years. Factories operated at 73.8 percent of their full capacity in August, the lowest level since May 2009 when the rate fell to 73.6 percent, the report showed.

Corporate investment and consumption all declined last month, indicating that business and consumer sentiment remains frozen amid lingering economic uncertainty. Facility investment plunged 13.9 percent from a month earlier and retail sales also shrank 3 percent over the same period, according to the report.

The finance ministry said that labor strikes in the auto industry had a "significant" impact on the overall industrial production figures last month, which in turn affected retail sales, service-sector production and even facility investment.

Typhoons that hit the country late last month also played a role in worsening those indices, it added.

"As worries about global economic slowdowns continue, domestic consumption and investment sentiment worsen and uncertainty at home and abroad is also persisting," the ministry said. "The government will closely watch economic situations here and overseas, and intensify policy efforts to improve our economic vitality." (Yonhap)