January Manufacturing Sentiment Rebounds... "Increase in Semiconductor Component Sales and Equipment Orders"

The Bank of Korea: "The Psychological Impact on Businesses May Vary Depending on the Spread of Wuhan Pneumonia"

[Asia Economy Reporter Kim Eunbyeol] Expectations that the semiconductor industry will improve have contributed to manufacturing companies' business sentiment showing signs of improvement this month compared to last month.

According to the 'January Business Survey Index (BSI) and Economic Sentiment Index (ESI)' data released by the Bank of Korea on the 30th, the manufacturing industry BSI for this month recorded 76, up 2 points from the previous month. On the other hand, the non-manufacturing BSI fell by 5 points to 73, resulting in an overall industry BSI of 75, down 1 point from the previous month.

The BSI is an indicator that reflects companies' perception of the business climate; if more companies respond negatively than positively, the index falls below 100. Although manufacturing companies' business sentiment has improved, pessimistic views still prevail.

The manufacturing industry BSI rose 2 points from the previous month despite the automobile industry's BSI dropping by 6 points, as sectors such as electronics, video, and communication equipment (+10 points) and other machinery and equipment (+5 points) increased.

Lee Seong-ho, head of the Corporate Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "Although the automobile BSI was negatively affected by strikes at finished car manufacturers, the semiconductor industry's improvement led to positive trends in demand for parts and equipment." Sales of semiconductor-related electronic components increased, and orders for semiconductor equipment and transportation equipment rose, improving companies' perceived business conditions.

When breaking down the manufacturing industry BSI by company size and type, large enterprises (83) rose by 3 points, small and medium enterprises (69) by 1 point, export companies (85) by 5 points, and domestic companies (71) by 1 point, all showing an upward trend.

Among non-manufacturing sectors, construction showed a weak performance with a 9-point decline. This was influenced by companies' expectations of a sluggish housing construction market following the government's real estate measures in December. Additionally, a decrease in orders related to IT systems, which had been concentrated at the end of the year in the public sector budget execution, and a drop in advertising agency demand contributed to the decline in the non-manufacturing BSI.

The business outlook BSI for all industries in February is projected at 76, up 2 points from this month's outlook. Manufacturing is expected to increase by 4 points to 77, while non-manufacturing is estimated to decrease by 1 point to 74.

The Economic Sentiment Index (ESI), calculated by combining the BSI with the Consumer Sentiment Index (CSI), rose 2.8 points from the previous month to 95.7. The seasonally adjusted ESI cyclical component also increased by 0.6 points to 94.3.

Meanwhile, the recent spread of the novel coronavirus infection (Wuhan pneumonia) was not reflected in this survey. The survey was conducted from the 13th to the 20th, but the spread of the novel coronavirus intensified from the afternoon of the 20th. Lee said, "The psychological impact on companies could vary significantly depending on how much further the novel coronavirus spreads and how quickly it is contained."

This content was produced with the assistance of AI translation services.