South Korea's industrial output fell for the third consecutive month in July due to sluggish production in the semiconductor and automobile sectors, data showed Friday.

Industrial output decreased 0.4 percent on-month in July, following a 0.1 percent drop the previous month, according to data compiled by Statistics Korea.

Compared with a year earlier, however, industrial output increased 2.7 percent in July, the data showed.

"While industrial output has decreased for three consecutive months, it has posted growth compared to a year earlier, indicating that the industrial sector is in a stable condition," said Kong Mi-sook, a senior official at Statistics Korea.

The output in the mining, manufacturing, gas and electricity industries fell 3.6 percent on-month in July, primarily due to an 8 percent decline in chip production and a 14.4 percent drop in automobile production.

The agency attributed the decrease in the chip segment to reduced production of memory chips.

The local production of recreational vehicles and midsized sedans also lost ground, leading to an overall decrease in the output of the car segment, it added.

The output in the service industries, meanwhile, added 0.7 percent on-month in July, as gains from the telecommunication and travel industries offset losses in the financial sector.

Retail sales, a gauge of private spending, fell 1.9 percent on-month in July, mainly due to declining sales of automobiles, gasoline and semidurables. Compared with a year earlier, sales dropped 2.1 percent.

Facility investment, on the other hand, increased 10.1 percent on-month in July, bolstered by the transportation sector that jumped 50.5 percent, the data added.

Investment in the machinery industry, however, decreased 1.6 percent over the period. (Yonhap)