South Korean firms' business sentiment dropped to an 18-month low in August.

According to the Bank of Korea on Thursday, the business survey index(BSI) for August for all industries stood at 74, down one point from the previous month.

The index has been slipping every month from 81 in May and marks the lowest since February last year. 

However, manufacturing businesses' expectations for the coming month rebounded on improved prospects in the chemicals and auto industries. 

The central bank said that the BSI of manufacturers came to 77 for September, up four points from a 19 month-low of 73 the previous month. It marks the first increase in three months. The index of non-manufacturers also increased three points to 77. 

The BSI measures corporate confidence. A reading below 100 means that the majority of firms have a negative outlook for the economy.