May Corporate Sentiment Stagnates... Impact of Car Semiconductor Shortage and Raw Material Supply Disruptions

May 2021 Business Survey Index (BSI) and Economic Sentiment Index (ESI)

On the afternoon of the 21st, finished vehicles are waiting in the storage yard next to the export shipment dock at Hyundai Motor Company's Ulsan plant. [Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] Although the global economy is improving with the supply of COVID-19 vaccines, domestic corporate sentiment in May remained stagnant. It is understood that the shortage of automotive semiconductors and concerns over raw material supply disruptions had an impact.

According to the "May 2021 Business Survey Index (BSI) and Economic Sentiment Index (ESI)" released by the Bank of Korea on the 26th, the overall industry business condition BSI recorded 88 this month, the same level as last month. The overall industry business condition index rose from 76 in February to 83 in March and 88 in April, but there was no change in May.

Among them, the manufacturing business condition BSI was 96, unchanged from the previous month. The business condition indices for metal processing and electronic, video, and communication equipment rose by 10 points and 5 points respectively, as demand increased in upstream industries such as electronic components and prices of parts like semiconductors rose. However, the automotive business condition index fell by 5 points due to the automotive semiconductor supply shortage, and the rubber and plastics business condition index also dropped by 5 points as the automotive upstream industry showed weakness.

By company size, only the large enterprises' business outlook BSI in manufacturing rose. The large enterprise BSI (110) increased by 3 points, while small and medium enterprises (80) fell by 3 points. Domestic companies (89) rose by 1 point, whereas export companies (109) remained the same as the previous month.

The manufacturing business outlook BSI for next month was 97, down 1 point from the previous month. The weakness in the automotive upstream industry and the possibility of raw material supply disruptions are interpreted as factors lowering corporate sentiment.

This month, the non-manufacturing business condition BSI was 81, down 1 point from the previous month, and the business outlook BSI for next month (81) also fell by 1 point compared to the previous month.

The non-manufacturing business condition BSI rose in information and communication (+9 points), but declined mainly in professional, scientific, and technical services (-9 points), arts, sports, and leisure (-7 points), and construction (-3 points). This is due to a decrease in group tourists and sports spectators, as well as a reduction in construction orders.

Meanwhile, the May economic sentiment index (ESI), which combines the BSI and the Consumer Sentiment Index (CSI), rose by 0.1 points from the previous month to 105.4.

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