Large companies in South Korea operated below 80 percent of their capacity in the third quarter due to the economic slump, down more than two percentage points from a year earlier.

The Leaders Index, a corporate analysis institute, released its assessment on Tuesday of the capacity utilization rates published by 200 of the country's top 500 firms by sales.

According to the analysis, the average rate of the 200 firms marked 78-point-four percent in the July-to-September period, down two-point-one percentage points from a year earlier.

The latest reading is also one percentage point lower than in the third quarter of 2020, the first year of the COVID-19 pandemic.

The drop is attributed to sluggish demand due to the global economic slowdown despite increased production capacity.

Producers of construction materials suffered the largest fall in operating rates, which plunged by seven-point-four percentage points on-year to 70-point-five percent in the third quarter.