S Korea's factory output dips on weaker domestic demand

image captionAuto and electronics makers have been driving South Korea's industrial growth

South Korea's industrial output shrank in November as weaker domestic demand weighed on the construction and services sectors.

Output fell by 0.4% from October, the statistical office said, worse than many analysts had predicted.

Spending on equipment, construction and the service industry saw the biggest declines.

Issues such as the global slowdown and high levels of household debt are weighing on many consumers and firms.

The figures come a day after the Bank of Korea said its manufacturing sentiment index fell to its lowest level in almost two-and-a-half years amid growing concerns about the depth of the global economic slowdown.

The Bank of Korea's manufacturers' outlook index fell to 79 in January from 83 in December. That was the lowest reading since the 78 recorded in July 2009.

Businesses blamed the gloomy outlook on sluggish local demand, soft global economic conditions and higher raw material costs.

Good or bad?

For some observers, Thursday's industrial output report will only add to the feeling of gloom affecting many companies and consumers.

"We've been seeing worsening numbers on both the real economic and sentiment fronts. Today's set of indicators added to that and could drag sentiment down in turn," said Yum Sang-hoon, a fixed-income analyst at SK Securities.

However, Thursday's statistical office report was not all bad news.

The annual rate of industrial output was up 5.6% in November when compared to the same month a year earlier.

At the same time, exports in the mining and manufacturing sectors rose by 8%, the report said.

South Korea relies on exports for roughly half of its total economic output.

Related Internet Links

The BBC is not responsible for the content of external sites.