SEOUL, Feb. 28 (Xinhua) -- South Korea's industrial output fell for the first time in three months as inventory correction in mobile phone industry reduced demand for chips and display panels, statistical office data showed Thursday.
Production in all industries fell 0.7 percent in January from a month earlier, the first decline in three months, according to Statistics Korea.
The decline was unexpected as market watchers predicted an output growth given a surge in exports and a rise in business days arising from the Lunar New Year's holiday.
Exports, which account for more than half of the economy, rose 13.9 percent in January from a year earlier after dipping 7.5 percent in the previous month. The export growth led the current account balance to stay in the black for 12 straight months.
The Lunar New Year's holiday tends to distort economic data in January and February. The holiday fell on February this year, increasing this January's business days and helping economic indicators show a rosy picture.
Output in the mining and manufacturing sectors decreased 1.5 percent in January after growing 1.6 percent in the prior month. Production by manufacturers, which makes up around half of all industrial output, slid 1.1 percent.
"Production in chips and LCD panels reduced after some major handsets experienced inventory correction. The IT industry accounted for 91 percent of the slump in the mining and manufacturing sectors," the Ministry of Strategy and Finance said in a press release.
Local manufacturers operated at an average capacity of 78.1 percent in January, down 0.3 percentage point from the prior month. The factory utilization rate fell for the first time in five months.
Production in the service industry fell 0.9 percent last month, the first fall in three months. The end of temporary cuts in acquisition tax dampened housing transactions that dropped to 27, 000 in January from 108,000 a month earlier.
Retail sales decreased 2 percent as the expiration of provisional cuts in consumption tax pulled down demand for automobiles. Auto production tumbled 13.8 percent last month, accounting for around 70 percent of the sluggish retail sales.
Facility investment plunged 6.5 percent in January after jumping 6.3 percent in the previous month as investment into general machinery and transport equipment declined last month. Machinery orders increased thanks to demand from the public sector.
Construction investment alone showed an on-month increase. The value of construction completed at a constant price rose 02 percent, while construction orders plunged 24.2 percent.
The cyclical component of the composite leading indicator, which reflects outlook for industrial conditions, fell 0.2 point in January from the month before, but the coincident index of economic indicators was unchanged at 99.2.