South Korea August factory activity slumps to one-year low, export orders fall: PMI

August 31, 2016 8:34 PM EDT

Hyundai Motor's sedans are assembled at a factory of the carmaker in Asan, about 100 km (62 miles) south of Seoul, January 22, 2013. REUTERS/Lee Jae-Won

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SEOUL, (Reuters) - - South Korea's manufacturing activity contracted at its fastest pace in a year in August as production and export orders declined sharply, a private survey showed on Thursday, suggesting the economic recovery remains fragile.

The Nikkei/Markit South Korea purchasing managers' index (PMI) fell to 48.6 in August on a seasonally adjusted basis from a revised 50.1 in July, IHS Markit said in a statement.

It was the lowest index level since 47.9 in August last year.

A sub-index showed that new export orders declined the most this year amid stubbornly weak global demand, falling to 48.6 from 51.4 in July. A reduction in trade volumes with China, Germany and Iraq contributed to the decline, according to the survey.

That helped push output readings to a six-month low.

South Korea's exports have been falling since January 2015, stifling a recovery in Asia's fourth-largest economy, which generates about half of its gross domestic product from overseas sales.

The government expects global trade to improve in the second half of the year and lift shipments, although low growth in Europe and China's slowing economy are seen crimping export earnings.

Markit is a registered trade mark of IHS Markit Limited.

(Reporting by Cynthia Kim; Editing by Shri Navaratnam)

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