South Korea's factory activity weakened for the seventh consecutive month in August, as overseas demand dropped on U.S. President Donald Trump's higher tariffs, a business survey showed on Monday.
The Purchasing Managers Index (PMI) for manufacturers in Asia's fourth-largest economy, released by S&P Global, stood at 48.3 in August, up from 48.0 in July.
The index has stayed below the 50-mark, which separates expansion from contraction, since February.
"According to manufacturers, challenging domestic economic conditions and the impact of U.S. tariffs weighed most on the sector, stymieing sales and production levels," said Usamah Bhatti, economist at S&P Global Market Intelligence.
Output fell for the sixth straight month and new orders extended losses for the fifth month, sub-indexes showed, although their declines were marginally softer than the month before.
New export orders dropped for the fifth month and by the most since April, when Trump introduced 10% baseline tariffs on all imports.
Anecdotal evidence highlighted that U.S. trade policies weighed heavily on external sales, according to the survey.
South Korea's economy grew in the second quarter at the fastest pace in more than a year, on strong technology exports and a rebound in consumer spending, but faces headwinds from higher U.S. tariffs.
In August, higher 15% tariffs came into force on U.S. imports from South Korea, after the two countries reached a trade deal in late July that avoided a steeper 25% import duty on the Asian nation's goods.
To help mitigate downward pressure, the liberal administration of President Lee Jae Myung proposed last week a sharp increase in budget spending, while the central bank flagged further policy easing.
South Korean manufacturers turned optimistic about the outlook for the year ahead, buoyed by hopes of new product launches and improvements in domestic economic conditions, the PMI survey showed, though they still cited concerns about the impact of U.S. tariffs.
