South Korea's industrial output fell for the third straight month in May as the sluggish pace of global recovery hurt its outbound shipments and affected production of cars and semiconductors, a government report showed Tuesday.
  

According to the report by Statistics Korea, production in the mining, manufacturing, gas and electricity industries was down 1.3 percent last month compared with April. The drop comes after numbers fell 0.2 percent and 1.3 percent in March and April, respectively, the agency said.
  

Compared with a year earlier, industrial production was down 2.8 percent, after backtracking 2.6 percent in April.
  

Production in the service sector, a key engine for economic growth, contracted 0.4 percent from April but rose 2.4 percent from a year earlier, the report showed.
  

For all industries, including the service and construction sectors, output dipped 0.6 percent from the previous month and gained 0.2 percent vis-a-vis a year earlier. Data showed the construction sector doing well, although such gains were offset by weaknesses in the mining and manufacturing and the services sectors. The contraction marks the third month in a row that overall industrial output has declined from the previous month.
  

"A sharp drop in exports naturally affected automobile and semiconductor production last month," said Jeon Baek-geun, director of the short-term industrial statistics division.
  

Outbound shipment numbers for Asia's fourth-largest economy plunged 10.9 percent on-year in May and were down 5.7 percent for the first five months of 2015.
  

Output of cars was down 3.7 percent on-month, with computer chip production falling 4.8 percent. Numbers for broadcasting equipment and refined petroleum products rose 22.1 percent and 3 percent, respectively, last month vis-a-vis April.
  

"The relative poor showing also affected the factory utilization rate that moved down 0.7 percentage point from the month before to 73.4 percent," the official said. The number is the lowest tallied since May 2009 when the utilization ratio also stood at 73.4 percent.
  

Inventory in the manufacturing sector decreased 1.1 percent on-month but rose 4.2 percent from the year before.
  

In the service sector, production, which had been in positive territory the month before, backtracked 0.4 percent on-month, as retail sales moved down 1.3 percent. The statistical office said there was less demand for consumer electronics and other durable goods. Wholesale and retail output contracted 1.3 percent.
  

Business investment, another key barometer of growth, was down 1.3 percent on-month as companies spent less on general machinery purchases. From the year before, investment edged up 0.8 percent.
  

The latest report, on the other hand, showed that orders placed on domestic machinery jumped 15.1 percent on-year, which can be a sign that companies are moving to expand capacity.
  

In the construction field, the amount of actual work underway increased 2 percent on-month but was off 4.9 percent from a year earlier, mostly because of a poor showing in civil engineering projects. On the plus side, the number of orders received surged 84.5 percent compared with May 2014.
  

The finance ministry said that May's output numbers highlighted the impact exports exerted on the economy, adding that even retail sales, which had been growing in recent months, were starting to feel the pinch.
  

It said that with the outbreak of Middle East Respiratory Syndrome and problems surrounding Greece that are fueling global economic uncertainties, industrial output may suffer further setbacks in the near future.
  

"MERS has hurt both consumption and investment, with large retailers and the travel and leisure sectors all posting sharp drops in customers and sales," the ministry said. After the first MERS case was confirmed in late May, 33 people have died from the respiratory illness, with 182 people being diagnosed so far.
  

It said that the government will do its utmost to end the MERS outbreak and make more funds available to prop up the market.
  

The government announced last week that it will inject more than 15 trillion won ($13.4 billion) to fuel growth, which has taken a beating from worldwide economic developments and the MERS outbreak. The money will come from the extra budget and by making use of leftover funds from last year. (Yonhap)