Growth in a key measure of production by South Korean small and medium enterprises hit a yearly high in September, a think tank said Wednesday, in a sign that they are on a recovery track amid signs of improving domestic demand.
   

The output index covering 3,169 local SMEs reached 119.3 in September, up 2 points from a month earlier, according to the IBK Economic Research Institute affiliated with the state-run Industrial Bank of Korea.
  

It is the largest monthly gain in nine months. Since it hit 119.4 in December last year, it has been on a decline over the first eight months of 2015.
  

The IBK's production index is based on a survey of SMEs, counting their production value and costs, with the 2010 figure set at 100.
  

The think tank saw the September increase as a sign pointing to the start of a recovery in the SME sector.
  

"Although, we need to watch developments further, a monthly gain of 2 points is very impressive," said Hwang Soo-young from IBK Research. "We can carefully say that the domestic economy and SMEs are recovering."
  

The institute also said the capacity utilization rate of SMEs stood at 71.3 percent in September, up 1.1 percentage points from a six-year low of 70.2 percent in August.
  

Meanwhile, 27.3 percent of the survey companies said they were having difficult financial conditions, compared with 31 percent a month earlier, according to the think tank. (Yonhap)