SEOUL (Reuters) - - South Korea's manufacturing activity suffered its worst decline in four months in October and the outlook was even bleaker as new export orders fell, a private-sector survey showed on Monday, clouding an already tentative economic recovery.
The HSBC/Markit purchasing managers' index (PMI) on South Korea's manufacturing sector fell to a seasonally adjusted 48.7 in October from 48.8 in September, Markit Economics said in a statement. It was the lowest since hitting 48.4 in June.
A reading above 50 indicates expansion, while one below 50 indicates the activity shrank during the month. October was the fifth time in six months that the index was below 50.
A sub-index on new export orders fell for a third straight month to a seasonally adjusted 47.3 in October - the lowest in 14 months - from 48.8 in September. It stood below 50 for a seventh consecutive month.
Overall orders also contracted pointing to sluggish demand at home, too.
The findings came as financial market rates indicate investors were still pricing in high chances that the country's central bank will cut policy interest rate soon for the fourth time since May last year to spur economic growth.
Last week, data showed the economy expanded by 0.9 percent in the third quarter from the previous quarter, rebounding from a 0.5 percent rise in the second quarter. But industrial output was almost flat in September.
President Park Geun-hye warned on Wednesday the economy risks prolonged stagnation, citing low growth, low inflation, a weak Japanese yen that it helping rival exporters and a fast-ageing population as negative factors.
(Reporting by Joonhee Yu; Editing by Choonsik Yoo & Kim Coghill)