By Christine Kim and Cynthia Kim

By Christine Kim and Cynthia Kim


SEOUL (Reuters) - South Korea's industrial output rebounded by a seasonally adjusted 1.4 percent in July from June, data showed on Wednesday, beating market expectations as production of electronic components and cars boosted activity.


The median forecast in a Reuters survey of analysts was for output to decline 0.6 percent from June.


The June reading was revised to a 0.4 percent fall from May, down from a preliminary 0.2 percent decline estimated earlier.


"Temporary factors played a big part in today's numbers as we saw liquid crystal display exports rise because of the Olympic Games," a finance ministry official told reporters after the data was issued.


Electronic parts production rose 6.4 percent on-month in July while car output gained 3.7 percent over the period.

"Exports have been improving at a very slow pace but that has also been aiding production," he added.

August exports data is due on Thursday. The same Reuters poll projected a 0.6 percent rise, which would be the first gain in 19 months.

Moon Jung-hui, an analyst at KB Investment & Securities said he expected to see mild gains in output until year-end but the pace of improvement would be fairly slow.

On an annual basis, industrial output gained 1.6 percent, improving from a revised 0.8 percent increase from June.

The average factory operation rate in July was 73.8 percent, a 4-month high.

Meanwhile, service sector output declined 0.7 percent from a month earlier, slipping from a 1.0 percent gain in June and breaking a five-month rising run.

It was the first and worst fall since a 1.2 percent drop in January this year, but the finance ministry official said the decline was on base effects and services were expected to keep improving.

(Reporting by Cynthia Kim and Christine Kim; Additional reporting by Dahee Kim; Editing by Richard Pullin)