Industrial output expanded at the fastest pace in six months in July from a year earlier as consumers spent more on goods and services despite slowing exports. Production grew seven percent last month from a year before, the highest increase since January when output rose 14.3 percent, the National Statistical Office (NSO) reported Tuesday. The seasonally adjusted output jumped 1.3 percent from a month earlier, bolstered by stronger domestic demand for various industrial goods, including automobiles. Production of automobiles rose 20.8 percent last month compared to over a year ago, while output of semiconductors increased by 23.3 percent. "Rising sales of consumer goods were the main force behind the higher output in July even though exports, the main growth engine of Korea's economy over the past few years, continued to show a downward trend," an NSO official said. Domestic sales of durable and non-durable consumer goods increased 4.9 percent year-on-year last month, the highest increase in 30 months, according to the NSO. It also rose 0.2 percent from a month earlier. But the country's outbound shipments continued to fall, affected by a number of external negatives, including a stronger Korean won and record-high oil prices. Exports grew 6.2 percent in July from a year earlier, down from an increase of 8.2 percent a month ago. Shipments of industrial goods for domestic consumption jumped 6.6 percent over the same period, exceeding the export growth for the first time in three years. "ows that the economy has entered a genuine recovery phase. Domestic consumption will remain strong in the coming months, while exports are likely to slow further," said Shin Min-yong, senior economist at LG Economic Research Institute (LGERI). But Shin cautioned that the government and businesses should introduce measures to cope with rising oil prices and other external negative factors as they could derail the budding economic rebound. Domestic construction orders jumped 7.6 percent year-on-year last month, sharply down from the 38 percent growth in June, affected by a drop in public sector orders. "The government initiated a number of public construction projects in the first half by frontloading the fiscal budget. But orders fell last month as the government ran out of money," Shin of LGERI said. He added that the construction industry could see orders fall further in the second half if the government's upcoming anti-speculation measures dampened the private construction sector significantly. Wednesday, the Ministry of Finance and Economy unveils a wide range of measures, including hikes in capital gains and property holding taxes, to rein in surging property prices. Companies invested more in expanding production and other facilities last month as corporate investment in machinery and telecommunications equipment rose 4.7 percent from a year earlier, the NSO said. It marks the turnaround from a negative growth rate of 3.1 percent recorded in June. Factories were running at an average of 80.5 percent of full capacity in July, up 0.4 percentage point from a month ago, while producer inventories dropped by 0.1 of a percentage point to 96.2 percent over the same period. The index of leading indicators, the key gauge of future economic trends, jumped by 0.7 of a percentage point to 2.3 percent from June, rising for the third straight month. The coincidence index, which reflects current economic conditions, increased 0.1 of a point to 96.4.