Meanwhile, the output of the service sector increased 1.2 percent on-month due in part to increased sales of cars.

Retail sales rose 3.9 percent in August from a month earlier -- the highest level since January 2011, when they advanced 5 percent.

Kim Bo-kyoung, director of Statistics Korea's industry statistics division, said the hike in retail sales is attributable to increased purchases of passenger vehicles and rising demand for gift sets ahead of the Chuseok holiday, the Korean autumn harvest celebration.

Facility investment rose 1.9 percent in August from a month earlier, the third straight monthly gain, on increased imports of semiconductor manufacturing equipment and airplanes.

Semiconductors are a key export product for South Korea, home to Samsung Electronics, the world's largest memory chip maker, and its smaller rival SK hynix.

From a year earlier, overall industrial output grew 0.2 percent, according to the data. (Yonhap)