South Korea's unemployment rate inched down in August on increased hiring by the manufacturing and hospitality sectors, but its job creation lost ground sharply due to layoffs by slump-hit wholesalers and retailers, a government report showed Wednesday.

According to the report by Statistics Korea, the jobless rate stood at 3.4 percent last month, down from 3.7 percent in July. The number, however, represents a 0.1 percentage point rise from a year earlier.

The seasonally adjusted jobless rate for August was 3.6 percent, down from 3.7 percent tallied for July.

"The steady rise in employment in the manufacturing, hospitality and certain service sectors improved the annual jobless rate somewhat, although the job losses in wholesale and retail businesses caused the number of new posts created to fall," said Sim Won-bo, head of the agency's employment statistics division.

The South Korean economy added 256,000 jobs in August, down from 326,000 in July and marking the first time since April that the number has fallen below the 300,000 mark. In April, 216,000 more jobs were created vis-a-vis the year before.

While some 160,000 jobs were created in wholesale and retails in August 2014, 74,000 were actually lost last month, affected by sluggish domestic consumption, the official said.

The manufacturing sector created some 156,000 jobs last month, up 3.6 percent on-year, with hospitalities adding 102,000 for a gain of 4.8 percent. Such gains were offset by losses in agrofisheries, financials and wholesale and retail.

Thanks to students finding part-time jobs during the summer break, the unemployment rate for people between the ages of 15 and 29 came to 8 percent in August, down from 9.4 percent a month earlier and the lowest level since October last year.

The employment rate for people between 15 and 64 stood at 65.9 percent last month, down from a record high of 66.3 percent tallied for July.

The so-called labor underutilization indicator edged up to 11.5 percent last month from 11.3 percent the month before, according to the report.

The indicator is based on guidelines made by the International Labor Organization and reflects the number of people who are underemployed and those who currently hold part-time jobs but want full-time work. It also counts unemployed people who have given up looking for work not by choice but due to other circumstances, which makes them potential job seekers.

The rise is an indication that employment conditions felt by ordinary people are worse than what official jobless figures show.

Related to the disappointing number of new jobs created in August, the finance ministry claimed this is mainly due to the "high base effect" of Chuseok, or Korean Thanksgiving, falling in early September of last year. Because people buy gifts and prepare special dishes to eat with family and friends, there is usually a spike in demand for retail and wholesale workers before the holiday, which was the case in August 2014, it said.

This year, the three-day holiday, which is celebrated according to the lunar calendar, falls on Sept. 27 and can push up the number of jobs created this month.

The ministry said that while the number of jobs created last month decreased on-year, the seasonally adjusted number rose by 99,000 on-month.

"There has been a slow yet steady improvement in domestic consumption, and this should help employment numbers to grow in the coming months," the ministry predicted. (Yonhap)