South Korea factory activity expands on stronger exports, PMI shows

SEOUL, Jan 2 (Reuters) - South Korea's factory activity expanded in December, after two months of contraction, on a rebound in export demand, a private-sector survey showed on Friday, with manufacturers' optimism surging to a 3-1/2-year ?high.

The purchasing managers index (PMI) for manufacturers in Asia's fourth-largest economy, published by S&P ?Global, stood at 50.1 in December, just above the 50-mark ?separating expansion from contraction, after two consecutive months ?at 49.4.

"According to ?manufacturers, new product launches and improved external demand drove the improvement in sales," ?said Usamah Bhatti, economist at ?S&P Global Market Intelligence. "Exports were a notable point of strength."

The trade-reliant economy grew in the third quarter ?at the strongest pace in ?nearly four ?years, driven by robust exports and a rebound in consumer spending.?

New orders increased in December for the first ?time in three months and marked the strongest gain since November 2024, with export orders also rebounding, sub-indexes showed.

Output still extended losses for the third consecutive month, though the pace of decline was softer than the previous month.

Other near-term indicators ?also ?suggested improving demand. Input purchases rose by the most since August 2024, while stocks of finished goods were ?depleted by the most since May 2025.

Optimism for the year ahead grew to the highest level since May 2022 on hopes of business expansion and new product launches, according to the survey, with notable emphasis on the automobile and semiconductor sectors.

On the inflation front, input ?prices rose at the sharpest rate since July 2022 on currency weakness. That led output inflation to rebound to a nine-month high, following a dip ?in the previous month.

(Reporting by Jihoon Lee; Editing by Sam Holmes)