* 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 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
"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)