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S. Korea's industrial output shrinks 2.1 pct on-month in Sept.

South Korea's industrial output shrank in September from a month earlier, raising worries that the economy might be losing its recovery momentum, a government report showed Wednesday.

According to the report by Statistics Korea, production in the mining, manufacturing, gas and electricity industries fell 2.1 percent last month from a month earlier, a turnaround from a revised 1.6 percent gain in August. From a year earlier, the output also contracted 3.6 percent.

The service sector production inched up 0.3 percent on-month in September but dropped 0.3 percent compared with a year earlier, the report showed.

"Despite gains in the mining, electricity and gas areas, the September industrial output fell as production in manufacturing dropped," the agency said.

The report showed that the manufacturing output declined 2.3 percent on-month in September, mostly driven by falls in the automobile industry, whose production was disrupted by labor disputes.

Unionized workers at Hyundai Motor and Kia Motors, South Korea's two largest carmakers, went on a partial strike last month for 15 days and 13 days, respectively. The output in the car industry plunged 18.6 percent on-month in September, the report showed.

The average facility operating ratio in the manufacturing industry also dropped to 73.7 percent in September from a revised 76.3 percent in August. This marked the lowest level since May 2009 when the rate stood at 73.4 percent.

Private-sector spending and corporate investment both declined, pointing to anemic consumer and business sentiment.

Retail sales fell 2 percent in September from a month earlier, turning around from a revised 0.3 percent uptick in August.

Corporate investment also dropped. The report showed that companies' facility investment shrank 4.1 percent on-month in September and plunged 9.1 percent from the same month a year earlier.

The latest output data comes despite cautious expectations that the country's economy is showing some signs of picking up following a prolonged slow growth trend.

The country's gross domestic product grew 1.1 percent in the third quarter from three months earlier. This marked the fastest quarterly growth since a 1.3 percent on-quarter advance in the first quarter of 2011.

In drawing up its 2014 budget proposal, the government earlier forecast that the economy will grow 2.7 percent this year and 3.9 percent next year, but many experts and private-sector think tanks cast doubt that the objectives could be accomplished under the current economic conditions at home and abroad.

Finance Minister Hyun Oh-seok urged businesses to expand investment and hiring to help sustain the recent economic recovery.

"The government will muster up all of its strength to place the recent economic recovery trend on a stronger footing," Hyun said during a meeting with key policymakers in Seoul. "We ask for businesses as well to go out for active investment and employment." (Yonhap News)