SEOUL, Oct 29 (Reuters) - South Korea's September industrial activity data on Wednesday will likely provide further evidence that Asia's fourth-largest economy is picking up pace, as investors scour a week's worth of data for clues to how firmly a nascent recovery is grounded.
On an annual basis industrial output was tipped to post a 1.2 percent gain, a Reuters poll of 17 analysts showed, marking the third straight month of annual growth and the longest such run since end-2011.
Industrial output probably shrank by a seasonally-adjusted 0.4 percent on the month after a 1.8 percent gain in August, according to the poll.
The HSBC/Markit purchasing managers' index survey for South Korea will be released separately on Friday, providing an additional gauge of manufacturing sector activity.
South Korea's November manufacturing business outlook index is also due at 2100 GMT.
The Bank of Korea said last week the economy grew a seasonally adjusted 1.1 percent in the September quarter from the previous three months, beating market expectations and matching a 2-year high set in the previous quarter.
The central bank's data showed the growth was led more by domestic demand than exports, and the pattern looks set to continue as its latest monthly survey showed that consumer sentiment was the strongest in 17 months.
"Retail sales were so depressed in the first half that shoppers were even hesitant to buy basic foodstuffs, but things have gotten much better since August - at least on that front," said Lee Hee-ju, a vice president at Emart Company Ltd, the country's largest discount-store chain operator.
An official at one of the country's top department-store chains said the consumer mood was improving gradually versus the first half of this year, although he also stressed that a full-scale recovery was not yet confirmed.
South Koreans have enjoyed solid income growth, with unemployment just over a low 3 percent for the past two years, while inflation has been below the central bank's 2.5 percent to 3.5 percent target for more than a year. October's consumer price index is due on Friday, with the median market expectation remaining below 2.5 percent.
A range of data is due from Statistics Korea on Wednesday, but investors might pay extra attention to second-tier but forward-looking figures such as the composite leading indicator, a subset of the September industrial activity data.
Annual growth in the composite leading indicator posted 6.1 percent in August, the fastest in three years.
Exports by South Korea, home to such global players as Samsung Electronics and Hyundai Motor, remain subdued, however, as the advanced economies recover unevenly while emerging economies are slowing.
Exports in October were tipped to grow 3.9 percent from a year earlier, another Reuters survey showed, better than September's 1.5 percent decline but far from strong enough to dispel all doubts about the strength of global demand.
Some sectors, though, are reporting early signs of export recovery. A main smartphone plant for LG Electronics decided to keep running through the three-day Chuseok holidays in September to meet demand for its flagship G2 smartphone, a company official said.
The government will publish October foreign trade figures on Friday, which are usually watched across the world as South Korea is the first major exporting economy each month to report foreign trade data.
(Additional reporting by Se Young Lee and Miyoung Kim; Editing by Eric Meijer)