(LEAD) S. Korea's industrial output grows 0.7 pct in July

(ATTN: MODIFIES lead; ADDS details from 4th para)
SEOUL, Aug. 31 (Yonhap) -- South Korea's industrial output grew for the first
time in 10 months in July, raising hopes the economy might be recovering from a
steep downfall, a government report showed Monday.

According to the report by the National Statistical Office (NSO), production in
the mining and manufacturing sectors expanded 0.7 percent last month from a year
earlier, compared with a 1.2 percent on-year contraction in June.
The July figure is much better than a median estimate of a 1.4 percent annual
decline, found in a poll conducted by Yonhap Infomax, the financial news arm of
Yonhap News Agency. Output also increased 2 percent from a month earlier, marking
a seventh straight on-month expansion.
"Production turned positive mainly thanks to brisk activity in the semiconductor
and automobile sectors," Yun Myung-Joon, director of the NSO's short-term
industry statistics division, told a press conference. "The economy seems to be
continuing to make strong moves towards recovery."
Industrial output turned negative last October, affected by the global economic
downturn, which dented demand for South Korean exports. It continued to fall
annually by double-digits for five months until March, with the sharpest decline
of 25.5 percent taking place in January.
Signs are emerging, however, that the downturn might be nearing an end -- or at
least that the worst may be over. South Korea's overseas shipments and
consumption are both rebounding, figures show. Japan reported that its factory
output expanded 1.9 percent last month, marking the fifth monthly gain.
According to the Bank of Korea, the nation's gross domestic product expanded
on-quarter by 0.1 percent and 2.3 percent in the first and second quarters of
this year, respectively. Those gains followed a plunge of 5.1 percent in the last
quarter of 2008.
Experts and policymakers say that government-led stimulus measures helped revive
market sentiment. The administration earlier said it will maintain its
expansionary policy stance for the time being.
Sales of consumer goods grew 1.9 percent in July from a year earlier on brisk
demand for non-durable goods such as car fuel products. This marked the third
straight month of on-year expansion, according to the latest NSO report.
Facility investment, however, remained in a slump, plunging 18.2 percent from a
year earlier. The NSO said that companies seem to be reluctant to expand spending
because of an uncertain economic outlook.
"The factory operation ratio has yet to recover to the normal levels, and
business sentiment is not high enough to expand investment," said Yun of the NSO.
"An economic recovery, if it continues, will likely translate into a boost in
investment down the road."
The nation's average factory operation ratio rose to 78.7 percent in July from
76.6 percent a year earlier, the report showed. That is still lower than the
normal level of 80 percent, Yun said.
kokobj@yna.co.kr
(END)