Production of the service sector also moved up 2.1 percent on-year in August, while the manufacturing capacity utilization rate fell slightly to 72 percent in the same month from 73.1 percent tallied in July.

Exports, South Korea's key economic driver, are also doing well as September numbers soared 35 percent on-year on the back of rising global demand. Outbound shipments of semiconductors shot up 70 percent last month on releases of new mobile smartphones, with a 107.2 percent surge in steel products and a 57.6 percent rise in vehicles.

However, the KDI report said private consumption has remained in the doldrums for months as consumer sentiment dropped for two straight months to a five-month low of 107.7 in September.

Retail sales edged up 0.8 percent in August, slowing down from a 3.5 percent gain in July due to a sharp drop in sales of durable goods like wireless devices. (Yonhap)