South Korea's Aug factory output up for 2nd month, underpins economic recovery

[SEOUL] South Korea's industrial output expanded for a second month in a row in August thanks to gains in semiconductor production, data showed on Friday, reflecting a solid recovery in Asia's fourth largest economy.

Factory output rose a seasonally adjusted 0.4 per cent on-month in August, bang in line with the median forecast in a Reuters survey.

In July, factory output jumped 1.7 per cent.

The Statistics Korea data showed manufacturing output in semiconductors rose 12.4 per cent and electronic components 4.4 per cent from July.

"Increasing investment on facilities is providing good momentum for industrial activities overall," said Stephen Lee, an economist at Meritz Securities.

On the downside, car manufacturing fell 4 per cent on-month while transportation equipment output declined 18.5 per cent, offsetting the gains in IT production.

From a year earlier, factory output increased 2.7 per cent after slipping 0.2 per cent in July.

Pointing to the drop in output of transportation equipment, Mr Lee said a weakening construction sector will be a drag on growth through next year, but added that exports of cars and memory chips will continue to drive the recovery. "Manufacturing output in the fourth quarter will remain solid on robust exports growth," Mr Lee said, noting that factory output and exports growth go hand-in-hand.

Statistics Korea said service sector output gained 0.1 per cent in August on a seasonally adjusted basis following a 0.6 per cent rise in July.

REUTERS