Manufacturing Sentiment in South Korea Hits 13-Month Low

The manufacturing sentiment in South Korea has reached its lowest point in 13 months, driven by uncertainty surrounding exports following the U.S. presidential election. According to the November Business Survey Index (BSI) and Economic Sentiment Index (ESI) report released by the Bank of Korea (BOK) on Nov. 27, the Composite Business Sentiment Index (CBSI) for all industries fell to 91.5 this month, down 0.6 points from the previous month.

The CBSI is a sentiment index calculated using key indicators from the BSI. A CBSI above the long-term average of 100 from January 2003 to December 2023 indicates optimism, while a score below 100 reflects pessimism. Notably, the manufacturing CBSI dropped to 90.5, its lowest level since October last year, with a 2-point decline from the previous month marking the steepest drop since August's 2.9-point decrease.

Hwang Hee-jin, head of the statistical survey team at the BOK, commented, "The semiconductor sector continues to experience differentiation across subsectors, while concerns over export declines have grown for mobile phone component manufacturers. In the automobile sector, strikes at parts manufacturers, reduced production, and intensifying competition have also dampened sentiment."

On the other hand, non-manufacturing sentiment showed slight improvement. The non-manufacturing CBSI rose 0.4 points to 92.1 in November, driven by improved profitability and sales. Many businesses expect next month's outlook to worsen, particularly in manufacturing.