The seasonally-adjusted production in all industries, which exclude the agriculture, forestry and fishery sector, added 0.5 percent in August from a month earlier, according to Statistics Korea.
After falling for two months through June, the industrial output grew in August after increasing 1.5 percent in July.
Production in the services industry picked up 1.2 percent as the lodging and food service sector advanced 2 percent in August, the fastest growth since February last year.
It came from the recovering consumer spending, caused by the government's income-led economic policy to boost income especially among the low-income bracket.
As part of the income-led policy, the government raised minimum wage sharply and increased subsidy for the low-income bracket and the elderly, while launching projects to offer jobs for the elderly population.
Production in the wholesale and retail sector expanded 2.4 percent, with output in the finance and insurance sector rising 1.5 percent.
However, output in the mining and manufacturing industry reduced 1.4 percent in the month as production among manufacturers retreated 1.5 percent.
The reduction was attributed to the continued slide in export, which kept skidding for the ninth consecutive month to August amid the global trade dispute and the global chip industry's downturn.
Retail sales, which reflect private consumption, jumped 3.9 percent in August from a month ago. It was the biggest expansion in more than eight and a half years since January 2011.
Durable goods sale jumped 8.3 percent on strong demand for new models. Car sale advanced 10.3 percent in the month, marking the fastest increase since March 2016.
Demand for travel declined last month amid the ongoing campaign here to boycott Japanese products and tour to the neighboring country. It led to slump in the air transport and the travel service sectors.
The no-buy campaign was caused by Japan's tighter control in July over its export to South Korea of three materials vital to produce memory chips and display panels, the mainstay of the South Korean export.
Japan dropped South Korea off its whitelist of trusted trading partners, which are given preferential export procedure, in August. In return, Seoul also took Tokyo off its whitelist of trusted export partners.
Meanwhile, facility investment went up 1.9 percent in the month, keeping an upward trend for the third consecutive month.
Completed construction rose 0.3 percent in August from a month earlier, but construction orders sank 22.2 percent last month compared with the same month of last year.
The cyclical factor for leading economic indicators, which measure outlook for future economic conditions, fell 0.1 point in August from the previous month.
The figure for coincident indicators added 0.2 points in the month, posting the first rebound in three months.