(MENAFN- QNA) South Korea's industrial output shrank at the sharpest pace in nearly six years in August, raising worries that the economic recovery might be losing its momentum, a government report showed Tuesday.
According to the report by Statistics Korea, production in the mining, manufacturing, gas and electricity industries fell 3.8% last month compared with July.
This marked the largest on-month drop since December 2008 when it contracted 10.5%.
Production in the service sector inched up 0.3% in August from a month earlier, according to South Korea's News Agency (Yonhap).
"Workers in the automobile sector had their summer vacation mostly in August, which resulted in fewer working days and weak production. This also seemed to have a knock-on effect on the production of other related areas," Jeon Baek-geun, head of the agency's short-term industry statistics division, told Yonhap.
"The facility operating ratio and corporate investment were all affected. Since this is due to a one-off factor, we should wait further to know whether the slump is going to continue," he added. "I can say that the output is still in a recovery mode, but the problem is that the recovery pace remains weak."
The manufacturing sector led the overall decline with its output dropping 3.8%.
The production in automobile and other transportation equipment fell 16.2% and 12.7%, respectively.
The report showed that the average facility operating ratio in the manufacturing sector declined to 74% in August, the lowest ratio since May 2009 when it fell to 73.4%.
Facility investment also dropped 10.6% in August from a month earlier, which marked the sharpest drop since January 2003, when it fell 16.1%, the data showed.
Consumption seems to be improving from the almost frozen market sentiment following April's deadly ferry accident.
The report showed that the retail sales index rose 2.7% on-month in August, following a 0.3% gain tallied in July.
The output data comes as the government is worried that its economy might fall into a long phase of low growth in the face of slumping domestic demand and tough external market conditions.
In July, the government revised down its growth outlook for this year to 3.7% from 4.1%, citing anemic consumption and slowing exports growth that could hurt its overall economic recovery.
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