South Korea's industrial output inched up in August from the previous month on greater overseas demand for mobile phones and semiconductors, a government report showed Thursday.

According to the report by Statistics Korea, production in the mining, manufacturing, gas and electricity industries gained 0.4 percent on-month in August, a turnaround from a 0.3 percent on-month fall in July.

Compared with a year earlier, industrial production inched up 0.3 percent.

"South Korea's overall exports plunged in August, but overseas shipments of telecommunication devices, such as mobile phones and related components, increased, bolstering production," said Jeon Baek-geun, director of the short-term industrial statistics division. "Such gains helped offset losses in autos."

In August, exports from Asia's fourth-largest economy nosedived 14.9 percent on-year to $39.24 billion.

Output of telecommunication devices and semiconductors shot up 31.1 percent and 11.6 percent, respectively, compared with the previous month. Data showed automobile production sliding 9.1 percent on-month, although vehicle output numbers rose 5.4 percent vis-a-vis a year earlier.

Production in the service sector, a key part of the economy, also expanded 0.4 percent from July and rose 2.1 percent from a year earlier, the report showed.

The statistical agency said the monthly gain was fueled by more output in the hospitality and transportation sectors.

"The Middle East Respiratory Syndrome scare that hurt the service sector has all but vanished as economic stimulus measures to boost consumption are starting to pay off," Jeon said.

First confirmed in late May, the MERS outbreak has claimed 36 lives in the country, but no new case has been reported since July 4.

The statistical agency said the financial sector, including insurance, lost ground, backtracking 3.2 percent in August from a month earlier.

Private spending rose 1.9 percent on-month and 1.8 percent from August 2014 on the strength of demand for clothing and consumer electronic goods, with facility investments dipping 0.4 percent from July but jumping 17.1 percent on-year.

For all industries, which include services and construction, output rose 0.5 percent from the previous month and was up 1.3 percent from a year earlier.

The statistical agency said the increase marks the third month in a row that numbers rose compared with the previous month.

The overall increase is mainly due to increased output by the service and construction sectors. Construction output rose a solid 3.9 percent on-month and rose 4.5 percent on-year, according to the report.

The finance ministry said that while exports are not doing well, there are clear signs that domestic consumption is on the mend after a dismal showing in the second quarter.

"The start of the Korea Grand Sale and the designation of Aug. 14 as a temporary holiday helped push up consumption to exceed pre-MERS levels, with industrial output and business investments all moving towards recovery," it said

For September, a spike in consumer demand ahead of the Chuseok holidays and modest improvements on the export front should allow industrial output to move up. Last month, exports contracted 8.3 percent on-year.

Chuseok, or Korean Thanksgiving, which fell on Sunday, usually pushes up consumer demand as people buy gifts for family members and friends, and there is a spike in travel.

The ministry, however, said that external uncertainties, like a cooling Chinese economy and market jitters over a U.S. rate hike, require close monitoring because they could pose downside risks. (Yonhap)