Corporate Sentiment Improves for Two Consecutive Months... Manufacturing Firms Concerned About Exchange Rate Decline

[Asia Economy Reporter Kim Eunbyeol] Corporate sentiment continued to improve for the second consecutive month through November.

According to the Business Survey Index (BSI) results released by the Bank of Korea on the 25th, the November overall industry business performance BSI was 78, up 4 points from the previous month.

The BSI is a statistic that surveys entrepreneurs' judgments and outlooks on the current business situation. If negative responses outnumber positive ones, the index falls below 100. This survey included responses from 2,795 corporate entities nationwide. The survey period was from the 10th to the 17th.

The overall industry business performance BSI fell from 66 in August to 64 in September but rose sharply by 10 points in October, marking the largest increase since April 2009 (+11 points). In November, it rose further to 78, surpassing the January BSI of 75 before the COVID-19 cases emerged.

However, a Bank of Korea official stated, "It is premature to say that the level before the COVID-19 outbreak has been fully recovered," adding, "Since COVID-19 is still spreading globally, there is a possibility that economic activities may contract."

The manufacturing industry business performance BSI in November (85) increased by 6 points over the month, mainly driven by electrical equipment (+12 points), electronic, video, and communication equipment (+10 points), and automobiles (+9 points). Both large enterprises and small and medium-sized enterprises in manufacturing rose by 6 points each, and by company type, export companies (+11 points) and domestic companies (+2 points) both increased. Notably, the increase for export companies was the largest since March 2013 (+11 points). This month's manufacturing business performance BSI is also higher than the long-term average (79, January 2003 to December 2019).

Among management difficulties faced by manufacturing companies, the proportion attributed to exchange rates rose from 6.2% in October to 7.7% in November. The November proportion was the highest since April 2018 (8.8%). The Bank of Korea explained that the proportion expanded due to the decline in the won-dollar exchange rate this month.

The non-manufacturing industry business performance BSI in November was 73, rising 4 points from the previous month, mainly led by construction (+9 points), information and communication (+8 points), and wholesale and retail (+3 points). The overall industry outlook BSI for the next month (76) increased by 4 points. The manufacturing industry outlook BSI (81) rose by 5 points, and the non-manufacturing industry outlook BSI (72) increased by 3 points.

The Economic Sentiment Index (ESI), which reflects the Consumer Sentiment Index (CSI) along with the BSI, was 89.1, up 3.2 points from the previous month. The seasonally adjusted ESI cyclical component (85.3) rose by 4 points.

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