South Korea September factory output rises, but economic recovery uneven

By Christine Kim

SEOUL (Reuters) - South Korea's industrial output rose more than expected in September thanks to gains in car and semiconductor production, data showed on Monday, but underlying weaknesses in consumption underscored a fragile recovery in Asia's fourth-largest economy.

Factory output rose a seasonally adjusted 0.3 percent on-month in September, better than the median 0.5 percent fall in a Reuters survey and rebounding from a 2.4 percent decline in August.

The Statistics Korea data showed manufacturing output in cars rose 5.7 percent and semiconductors 4.6 percent from August. Car manufacturing rose in monthly terms as summer strikes at Hyundai Motor Co <005380.KS> eased off September.

Separately, retail sales dropped 4.5 percent last month, its worst fall since February 2011, dented by the discontinued fire-prone Galaxy Note 7 smartphone by Samsung Electronics Co Ltd <005930.KS>.

"Fourth quarter numbers will show a more dismal picture as we are running out of reasons that can boost output before year-end," said Park Jung-woo, an economist at Korea Investment & Securities.

Park said October exports data on Tuesday was more important than the output numbers as consumption was unstable, increasing the economy's reliance on exports.

A finance ministry official told Reuters some of the weaknesses in Monday's data were due to temporary factors and the economy continued to grow, though the recovery remained uneven.

On an annual basis, industrial output fell 2.0 percent in September after a revised 2.2 percent gain in August, It compared to a median 1.5 percent fall tipped in the Reuters survey.

Statistics Korea said service-sector output fell 0.6 percent in September on a seasonally adjusted basis following a revised 0.8 percent rise in August.

(Additional reporting by Dahee Kim; Editing by Shri Navaratnam)

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