The sentiment index has been falling for four consecutive months. According to the February Business Economic Survey Results and Economic Sentiment Index released by the Bank of Korea on the 21st, the Business Sentiment Index (CBSI) for all industries this month was 85.
The index fell 0.6 percentage points from the previous month to 3. It was the lowest since January, when it was 83.4 in September 2020 at the height of the COVID-19 virus pandemic.
The overall trend was similar to the previous month. In the manufacturing sector, export conditions improved in some sectors, but in the non-manufacturing sector, conditions worsened due to the economic slowdown and sluggish domestic demand.
"In the case of manufacturing, the number of business days has increased, and in the case of automobiles, the number of advance orders has increased before President Trump's tariff policy was implemented, leading to a rise in electronics," said Lee Hae Yeong, head of the economic sentiment research division at the Bank of Korea.
"In the non-manufacturing sector, the performance of the wholesale and retail sector was poor due to the impact of the drop in private consumption, while the construction industry was affected by the slump in the real estate market," he said.
"Since the start of the 2000s, sales and profitability have both been poor," he explained. The CBSI is a sentiment index calculated using the main indicators of five manufacturing companies and four non-manufacturing companies.
The base value (100) is the year 2024, and a higher index value than this indicates more optimistic sentiment than the long-term average, while a lower index value indicates more pessimistic sentiment.
The CBSI for all industries will start to decline from November 2024 compared to the previous month.
Concerns are growing over the worsening business environment due to unstable factors, and the situation has not improved due to the ongoing political instability in South Korea since the declaration of emergency martial law in December.
This month's CBSI for the manufacturing industry was 90.1, up 1.1 points from the previous month. The main factors behind the increase in the manufacturing industry were production and business performance.
The main improvements were in the automobile, primary metal, electronics, video and communication equipment sectors. The CBSI for non-manufacturing was 81.7, down 19 points from the previous month. The main factors behind the decline in the non-manufacturing sector were profitability and sales, while the construction sector was down 14.7 points.
The deterioration was mainly in the construction, wholesale and retail, and professional, scientific and technical services industries. As for the specific reasons for the difficult business conditions, the most common answer (23.1%) was sluggish domestic demand.
The next most common reason for this is the unstable economic situation (20.3%), followed by labor shortages and rising labor costs (13.3%). Companies are expecting the economic situation to improve next month in both manufacturing and non-manufacturing industries.
The index rose 2.6 points from the previous month to 88. The manufacturing index rose 2.0 points from the previous month, and the non-manufacturing index rose 3.2 points.
The Economic Sentiment Index (ESI), a composite of the Business Sentiment Index (BSI) and the Consumer Confidence Index (CSI), increased by .5% from the previous month.
The cyclical fluctuation value, which removes seasonal and other factors, was 88.4, down 0.9 points from the previous month.
The survey was conducted from the 6th to the 13th among 3,524 companies across South Korea.
There were 3,312 companies in the industry, of which 1,867 were manufacturing and 1,445 were non-manufacturing.
2025/02/21 07:03 KST
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