Seoul, Feb 28 (IANS): South Korea's industrial output fell for the first time in three months as inventory correction in mobile phone industry reduced demand for chips and display panels, statistical office data showed Thursday.

Production in all industries fell 0.7 percent in January from a month earlier, the first decline in three months, according to Statistics Korea.

The decline was unexpected as market watchers predicted an output growth on a surge in exports and a rise in business days arising from the Lunar New Year's holiday, reported Xinhua.

Exports, which account for more than half of the economy, rose 13.9 percent in January from a year earlier after dipping 7.5 percent in the previous month. The export growth led the current account balance to stay in the black for 12 straight months.

The Lunar New Year's holiday tends to distort economic data in January and February. The holiday fell on February this year, increasing this January's business days and helping economic indicators show a rosy picture.