The seasonally-adjusted production in all industries, which exclude the agriculture, fishery and forestry sectors, shed 0.1 percent in July from a month earlier, according to Statistics Korea.
It marked the first reduction in three months, after expanding 0.7 percent in May and 0.8 percent in June.
Output in the mining and manufacturing industry shrank 1.3 percent last month on soft demand for semiconductors as well as machinery and transport equipment.
Production in the services industry gained 0.3 percent in July from a month earlier due mainly to a recovery in the eatery and lodging and the arts, sports and leisure sectors.
The seasonally-adjusted retail sale, which reflects private consumption, retreated 0.3 percent in July after dwindling 0.7 percent in March, 0.3 percent in April, 0.1 percent in May and 1.0 percent in June.
Facility investment declined 3.2 percent in July on a monthly basis due to weak demand for machinery and transport equipment.
The cyclical variation factor for leading economic indicators, which gauges outlook for the future economic situation, slipped 0.3 points over the month to 99.4 in July.
The reading for coincident economic indicators, which measures the current economic conditions, added 0.5 points to 101.8 last month.
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