"Corporate Sentiment Remains Positive...Automotive Sector Faces Two Consecutive Months of Sluggishness"

Survey on Business Survey Index (BSI) for Top 600 Companies by Sales According to Hankyung Research Institute
May Outlook Rises 1.7p from April to Record 107.7

[Asia Economy Reporter Kim Heung-soon] The Korea Economic Research Institute (KERI) under the Federation of Korean Industries announced on the 28th that the Business Survey Index (BSI) for the top 600 companies by sales recorded a forecast of 107.7 for May, up 1.7 points from 106.0 in April.

A BSI above the baseline of 100 means positive responses outnumber negative ones, while a BSI below 100 indicates more negative responses. May showed a similar level to the previous month, continuing a positive outlook due to economic recovery.

By industry, the non-manufacturing BSI forecast rose 4.3 points from the previous month to 106.5. This was interpreted as influenced by an increase in business orders, including an 8.4-point rise in construction.

On the other hand, the manufacturing BSI forecast fell 0.4 points from the previous month to 108.6. The automobile forecast index dropped a total of 18.8 points over two months, reaching 90.0. Petrochemicals (-9.8 points) and non-metallic sectors (-7.3 points) also saw significant declines compared to the previous month. KERI analyzed that the shortage of automotive semiconductors is negatively affecting not only the finished car and parts industries but also the downstream industries’ perceived business conditions.

Looking at the May BSI forecasts by sector, all sectors exceeded the baseline: domestic demand (103.0), exports (105.8), investment (101.6), employment (105.1), financial conditions (102.3), profitability (104.0), and inventory (99.5; above 100 indicates excess inventory).

Although most forecasts rose compared to the previous month, the domestic demand forecast has declined for two consecutive months after peaking at 106.9 in March. In particular, the manufacturing domestic demand forecast dropped 8.2 points from 111.1 in the previous month to 102.9.

KERI pointed out that although recent consumption indicators show improvement, the recovery may be temporary due to revenge spending, and uncertainties in domestic demand remain high amid concerns over a fourth wave of COVID-19.

The actual BSI for April was 111.0, down 1.9 points from the previous month but still above the baseline. By sector, all sectors exceeded the baseline: domestic demand (106.1), exports (105.8), investment (101.2), employment (106.3), financial conditions (104.9), profitability (105.1), and inventory (98.6).

Choo Kwang-ho, head of KERI’s Economic Policy Office, said, "While corporate sentiment remains positive, contraction in key industries such as automobiles and concerns over a resurgence of COVID-19 are acting as downside risks to the economy."

The survey was conducted from the 15th to the 22nd of the month, with 428 companies responding and a response rate of 71.3%.

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