August Corporate Sentiment Stagnates... Non-Manufacturing Sector Actually ↑

[Asia Economy Reporter Kim Eunbyeol] Amid the ongoing impact of the COVID-19 resurgence, corporate sentiment remained stagnant.

According to the 'August Business Survey Index (BSI)' released by the Bank of Korea on the 25th, the BSI for overall industry business performance this month was recorded at 87. The index maintained the same level for the second consecutive month after falling last month for the first time in five months.

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 month's survey was conducted from the 10th to the 18th, targeting 3,255 corporate entities, of which 2,814 companies (1,634 manufacturing and 1,180 non-manufacturing) responded.

By sector, the manufacturing business performance BSI (95) dropped 2 points from 97, while the non-manufacturing sector, including services (81), rose by 2 points.

Kim Daejin, head of the Corporate Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained the decline in manufacturing BSI by stating, "Among manufacturers, the number of working days decreased during the vacation season for automobile companies, and electronic companies experienced disruptions in intermediate goods supply due to the suspension of parts suppliers caused by the COVID-19 resurgence."

He added, "The rise in non-manufacturing BSI is due to increased consumption of groceries and furniture as people spent more time at home, and the vacation season combined with low rainfall led to increased sales and demand for travel goods, gas stations, rest areas, forest parks, and golf courses."

Looking at detailed manufacturing sectors, the BSI for other machinery and equipment dropped by 10 points due to weakened demand in upstream industries (construction), while automobiles and electronic, video, and communication equipment fell by 8 points and 3 points respectively.

By company size in manufacturing, large enterprises decreased by 1 point and small and medium enterprises by 3 points. The business performance BSI for domestic companies also fell by 3 points, but export companies showed no change over the month.

In the non-manufacturing sector, business sentiment improved in business facility management, business support, and rental services (+9 points), arts, sports, and leisure (+7 points), and wholesale and retail trade (+5 points).

The outlook BSI for September business conditions (87), not the August performance, rose by 3 points from August (84). Manufacturing and non-manufacturing sectors increased by 4 points and 3 points respectively, reaching 96 and 81.

The Economic Sentiment Index (ESI) for August, which incorporates the Consumer Sentiment Index (CSI) into the BSI, recorded 105.3, up 1.4 points from July. The seasonally adjusted ESI cyclical component (109.4) rose by 1.8 points over the month.

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