South Korea's industrial output grew for the 18th straight month in December, suggesting the economic recovery remains on track, a government report showed Monday.

   According to the report by Statistics Korea, production in the mining and manufacturing industries expanded 9.8 percent last month from the same month a year earlier. The output has expanded since July 2009.

   Production grew 2.8 percent from the previous month. For all of 2010, it jumped 16.7 percent from a year earlier, the report showed.

   The increase is attributed to brisk output in the semiconductor and machinery equipment sectors, whose production expanded on-year 19.6 percent and 20.3 percent, respectively. This more than offset sluggish performances in the computer and transportation equipment sectors.

   The report showed that local manufacturing plants operated at 82.5 percent of capacity on average in December, a 1.6 percentage point increase from the month before. For 2010, the average factory utilization rate stood at 81.8 percent, up 7.2 percentage points from a year earlier.

   However, the leading economic composite index, a gauge of economic performance eight to 15 months ahead, fell 0.2 percentage points from a month earlier, marking the 12th straight month of contraction.

   Facility investment inched up 0.2 percent from a month earlier, while construction orders plunged 20.8 percent from the year before hard-hit by sluggish property markets.

   Meanwhile, the service sector output expanded 1.3 percent from November and 2.1 percent from a year earlier, the report showed. For 2010, the output increased 3.7 percent.

   The report comes as the South Korean economy remains on a solid footing as the private sector is ramping up production and investment on expectations that business conditions might be turning around.

   The Korean economy grew 6.1 percent last year from the previous year's 0.2 percent expansion. The 2010 growth rate was the highest in eight years, according to the nation's central bank.

   The government remains optimistic about the nation's economic outlook, forecasting that the economy will grow about 5 percent this year, pinning its hopes on robust exports and investment by the private sector.

   Experts still express caution, saying that high oil and commodity prices could weigh on business sentiment as more costs of purchasing key production materials could dent their profitability down the road.

(Yonhap News)