The March figure backtracked to negative territory following a 2.2 percent rise in February, which snapped a three-month losing streak.

Sluggish output in the machinery sector led the decline, sinking 10.4 percent on-year, with production of electronics parts, including displays, plunging 11.5 percent.

"The world's business circle is reducing facility investments, as some expensive industries like semiconductors and displays are struggling with oversupply," said Choi Jung-su, director of the short-term industrial statistics division.

"South Korea is in the midst of a worldwide low-growth trend. The country's industrial output is closely linked with exports."

To offset the sharp decline, however, production in the chemical and petroleum industries jumped 3.1 percent and 11.8 percent, respectively.

The semiconductor sector, which soared 33.7 percent in February on the back of the release of the latest smartphones, saw its output gain 0.1 percent in March.

February's average plant utilization in the manufacturing sector reached 73.2 percent, down 0.3 percentage point from a month earlier.

Meanwhile, domestic consumption jumped by a four-month high of 5.7 percent on-year in March, up from a 3.1 percent on-year gain in the previous month, on the back of robust sales of durable goods like passenger cars.

From a month earlier, consumption rose 4.2 percent in March, the highest on-month gain since February 2009, when it hit 5 percent.

The South Korean government extended an excise tax cut program on passenger cars until June in a bid to repeat the brisk performance in October and November last year, when the consumption figures soared 8.6 percent and 6.2 percent, respectively.

Production in the service sector expanded 2.7 percent from a year earlier and improved 0.8 percent on-month, a turnaround from a 1.3 percent fall, the report showed.

For all industries, output moved up 2.2 percent from the same month in 2015 and climbed 0.6 percent from a month earlier.

For the first three months of the year, industrial output retreated 0.8 percent on-quarter, while domestic consumption fell 1.1 percent.

South Korea's outbound shipments sank 13.1 percent on-year to $116 billion over the three-month period, with its imports tumbling 16.3 percent on-year to $93.6 billion.

The finance ministry said the government will make more efforts to make a rebound in industrial production and keep the recovery pace in domestic consumption.

"The March figures show some signs of recovery in consumption, but the entire industry still remained in the doldrums since the beginning of the year," the ministry said in a release. "The government will focus on carrying out its expansionary fiscal policies to boost investment and consumption." (Yonhap)

(khnews@heraldcorp.com)