S.Korea's BSI dips below 100 for 15th consecutive month

The figure for June is 90.9, with manufacturing and non-manufacturing sectors projecting economic downturn

S.Korea's BSI dips below 100 for 15th consecutive month
Jae-Fu Kim 1
2023-05-23 11:44:54 hu@hankyung.com
Economy

The economic outlook of South Korean manufacturing and non-manufacturing sectors is negative for June, the 15th consecutive month of such pessimism.

A Business Survey Index (BSI) report released on Tuesday by the Federation of Korean Industries (FKI) on the nation's 600 largest companies in sales said the BSI for next month was 90.9.

The BSI is an indicator of business sentiment. A BSI of over 100 means many companies believe that the economy will improve from the previous month, but a figure under 100 means such companies think the opposite. The BSI has stayed below this benchmark since April 2022 when it last scored 99.1.

Both manufacturing and non-manufacturing sectors have languished below the 100 benchmark for 13 months in a row since June 2022, each scoring 90.9 in the June survey.

When delving into the manufacturing sector, only three industrial sectors met the benchmark - automobiles and other transportation equipment, pharmaceuticals and non-metals. The other seven surveyed, including wood and furniture, metal and metal products, textiles and clothing, petroleum refining and chemicals, food and beverages, electronics and telecommunications equipment and general and precision machinery and equipment, all projected a business slowdown.

Notably, the electronics and telecommunications equipment industry, inclusive of semiconductors, saw a 23-point month-over-month rise in BSI, though it remained under 100, reflecting a weak outlook for the ninth consecutive month.

In the non-manufacturing sector, only the electricity, gas and water industry, which was poised for price hikes, scored above the 100 benchmark with 105.9. The information and communications industry languished at the bottom with 82.4.

Across all surveyed sectors, the BSI reported negative sentiments, including financial situation (89.1), profitability (90.9), domestic demand (92.7), investment (93.2), exports (93.9), employment (97.0) and inventory (104.1). An inventory surpassing the 100 benchmark suggests overstock.

Write to Jae-Fu Kim at hu@hankyung.com
#Federation of Korean Industries #Business Survey Index #BSI forecast #manufacturing sector #non-manufacturing sector

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