Unemployment rises in South Korea

Small businesses are hit by poor domestic demand

Unemployment in South Korea has risen to an eight-month high of 3.6% in July.

The jobless rate was last at this level in November, before falling to 3.3% in January.

Higher oil prices, rising US interest rates and cooling demand for the country's exports have contributed to fears about South Korean growth.

Its economy is expected to grow by 0.5% in the second quarter, compared with 0.8% in the first quarter and 2.7% in the fourth quarter of last year.

The number of people in work fell to 22.41 million in July from 22.52 million in June, the National Statistical Office said.

Small companies hit

Rising exports has contributed to job creation in larger companies but smaller companies, who are some of South Korea's biggest employers, have been hit by poor domestic demand.

"The depressed job market will hurt consumers' purchasing power in turn and put domestic spending recovery in a vicious cycle," said Song Tae-jung, an economist at LG Economic Research Institute.

A recent survey by the Federation of Korean Industries showed that a majority of South Korean firms expected business conditions to worsen in August.

Last week, the central bank cut interest rates for the first time in 13 months in a move to boost the economy and stimulate weak domestic demand.