SEOUL (Reuters) - South Korea's manufacturing activity contracted for a third straight month in March but at a much more moderate rate, suggesting some respite for the struggling trade-reliant economy, a private-sector survey showed on Friday.
The Nikkei/Markit purchasing managers' index (PMI) on South Korea's manufacturing sector inched up to 49.5 in March on a seasonally adjusted basis from a six-month low of 48.7 in February, data from Markit Economic showed.
A reading below 50 indicates activity during the surveyed month contracted from the previous month, while levels above 50 point to expansion.
Reflecting still sluggish global demand, a sub-index on new export orders received by South Korean manufacturers ticked down to 49.3 in March from 49.6 in February in a second month of contraction.
But total new orders - covering both domestic and export demand - showed some signs of stabilising and were unchanged after shrinking for two months.
Another sub-index showed input prices at South Korean manufacturers increased in March for the first time in 19 months to 51.0 from 46.3 in February, indicating inflationary pressures intensified.
Most market players expect the Bank of Korea to cut interest rates again to give the economy a push, but recent remarks by policymakers and economic indicators have been increasing the chances that the bank may sit pat at its next policy meeting on April 19.
South Korea's central bank chief Lee Ju-yeol reiterated on Wednesday that its current monetary policy is supportive of growth but propped the door open to possible easing in future by adding the economy is recovering at a slower pace than earlier thought.
Analysts had initially said the central bank could cut at any time should the economy require more stimulus, but stronger-than-expected February industrial output data on Thursday may give the BOK more reason to pause, they said.