South Korea's industrial output grew for the second straight month in July, raising expectations that the economic recovery might be gaining some momentum, a government report showed Friday.

According to the report by Statistics Korea, production in the mining, manufacturing, gas and electricity industries expanded 1.1 percent last month from June. The growth rate, however, slowed down from a revised 2.6 percent gain a month earlier.

Production in the service sector inched down 0.4 percent on-month in July, the report showed.

"The slowing pace of output growth is due to weak production in the service and construction sectors. The overall growth in manufacturing fared quite well thanks to more working days compared with a month earlier," said Jeon Baek-geun, head of the agency's short-term industry statistics division.

"We need more time before saying that the slowdown is a trend.

It is still meaningful that the output increased for two straight months," he added.

The report showed that the output in the manufacturing sector expanded 1.2 percent on-year in July.

Production of vehicles and oil refinery products grew 10.7 percent and 7.5 percent over the cited period, while semiconductors and their parts saw their production shrink 4.9 percent.

The report also showed that the average facility operating ratio in the manufacturing sector rose to 78 percent in July from the previous month's revised 76.4 percent. This marked the highest operation ratio in six months since January when it stood at 78.2 percent.

Consumption continued to improve, but the rate of its recovery remained weak.

The report showed that the retail sales index increased 0.3 percent on-month in July, following a revised 0.1 percent gain tallied in June.

Corporate investment rebounded strongly from the previous month's shrinkage. Facility investment by businesses advanced 3.5 percent on-month in July, turning around from June's 1.2 percent fall.

The output data comes as the government is intensifying its efforts to stimulate the economic recovery amid worries that it could slip into a protracted low growth phase from tough situations at home and abroad.

Last month, the government revised down its growth outlook for this year to 3.7 percent from 4.1 percent, citing anemic consumption and slowing exports growth that could hurt its overall economic recovery.

"The pulse in the economy is weakening," Finance Minister Choi Kyung-hwan had said, also expressing worries that the economy might be entering "an early phase of deflation." The finance ministry later explained that his remarks were based on the assumption that the current dire economic conditions persist. (Yonhap)