SEOUL, Jan 2 Reuters South Korea39;s factory activity contracted in December, with manufacturers39; sentiment turning pessimistic for the first time since mid2020 due to uncertainty over U.S. trade policy and domestic politics, a private sector survey showed on Thursday.

The purchasing managers index PMI for manufacturers in Asia39;s fourthlargest economy, compiled by SP Global, fell to 49.0 last month from 50.6 in November, slipping below the 50mark that separates expansion from contraction for the third time since August.

Output shrank for the fourth consecutive month in a row and the decline was steeper than the previous month, while new orders also fell, subindexes showed.

The deterioration in demand was linked to weaker client confidence in the domestic market, according to the survey, while export orders grew only marginally.

The gloom was reflected in manufacturers39; sentiment for the year ahead, which fell below the 50threshold separating optimism and pessimism for the first time since July 2020 and marked the lowest in 412 years. Excluding the COVID19 pandemic period, it was the worst since the data series began in April 2012.

Last month, South Korean President Yoon Suk Yeol was impeached after his imposition of a shortlived martial law on Dec. 3, raising political uncertainty and dampening consumer as well as business confidence.

Downbeat expectations often stemmed from concerns surrounding domestic economic conditions, as well as potential U.S….