UPDATE 1-S.Korea Aug factory output at 9 mth high, lifts Q3 prospects
* August output s/adj +1.8 pct m/m vs +0.5 pct forecast
* Fin min official says data backs view for gradual recovery
* S.Korea Sept exports, inflation data due Tuesday (Updates with comments from analysts, October BSI data)
SEOUL, Sept 30 (Reuters) - South Korea's industrial output expanded in August from the previous month at its quickest pace in nine months, data showed on Monday, bolstering third-quarter growth prospects for Asia's fourth-largest economy.
Industrial output rose by a seasonally adjusted 1.8 percent in August from the previous month following a revised 0.3 percent fall in July, Statistics Korea data showed.
The outcome beat the median forecast from a Reuters survey of economists for a 0.5 percent rise and was better than the most optimist pick for a 1.5 percent rise in the survey.
South Korea's industrial output closely mirrors its exports, as the country is home to some of the world's biggest manufacturers of cars, ships and smartphones. Exports in August grew by 7.7 percent from year earlier, the strongest in seven months, and along with other data in recent months suggest the economic recovery is starting to gather momentum.
"Overall, the economy is gradually turning around in the second half," said NH Investment economist Kim Jong-soo. "The output data shows an improvement in average utilisation rate, retail sales and capital investment."
The data, combined with a Bank of Korea survey showing that local manufacturers' assessment of likely business conditions rose to a 17-month high for October, suggests that the trade-dependent country continues to recover as stabilisation in the U.S. and China improve prospects for exports.
South Korea's sequential gross domestic product growth accelerated to a seasonally adjusted 1.1 percent in the second quarter from 0.8 percent seen in the January period, and the firm August exports and output data bolster expectations that growth in the current July-September quarter will remain firm.
Government officials remained cautious on the economic outlook, however.
"We see the August data as supporting evidence to the belief that the economy remains on track for a gradual recovery," Choi Sang-mok, director general of economic policy at the Ministry of Strategy and Finance, told Reuters.
NH Investment's Kim also said the government and the Bank of Korea will retain their growth-supportive policies for now.
South Korea's September trade and consumer inflation data will be released separately on Tuesday. Median forecasts Reuters survey of economists suggest weaker annual exports growth and inflation for this month compared with August's, suggesting that growth momentum remains modest at present.
The Bank of Korea kept the policy rate unchanged at 2.50 percent earlier in September for the fourth consecutive month after cutting by 25 basis points in May, and Kim said he does not expect the central bank to change rates in the near term.
"Only time will tell whether the current recovery will be sustained, and there are also uncertainties looming over financial markets because of the cloud over the U.S. tapering of its bond-buying stimulus," Kim said. (Reporting by Se Young Lee; Additional reporting by Lee Shin-hyung; Editing by Shri Navaratnam)
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