Although Corporate Sentiment Improved... Non-Manufacturing Sector Remains 'Bleak'

December Corporate Sentiment Turns Upward
COVID Spread and Cold Weather... Non-Manufacturing Sector Slumps

On the 26th, the Youth Street in Jongno-gu, Seoul is quiet due to the severe cold and the impact of COVID-19. Photo by Moon Honam munonam@

[Asia Economy Reporter Jang Sehee] Corporate sentiment slightly improved in December. However, the non-manufacturing sector remained sluggish due to the ongoing impact of COVID-19.

According to the Bank of Korea's "December 2021 Business Survey Index (BSI) and Economic Sentiment Index (ESI)" released on the 29th, the BSI for all industries this month recorded 87, up 1 point from the previous month. It had recorded 86 in both October and November, marking a turnaround. The BSI is an indicator showing the business conditions as perceived by companies; if the number of firms responding negatively exceeds those responding positively, the index falls below 100.

By sector, manufacturing rose compared to the previous month, while non-manufacturing declined. Kim Daejin, head of the Corporate Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "Manufacturing increased by 5 points due to improvements in the semiconductor industry, whereas non-manufacturing sectors such as passenger transport, wholesale and retail, and accommodation worsened due to the spread of COVID-19."

The manufacturing BSI rose 5 points from the previous month to 95. Although primary metals fell by 7 points, electronics, video, and communication equipment (+12 points) and metal processing (+9 points) increased.

By company size and type, large enterprises rose by 5 points and small and medium enterprises by 6 points. Export and domestic companies also increased by 7 points and 4 points, respectively.

The non-manufacturing BSI fell 1 point from the previous month to 82. Due to the spread of COVID-19, passenger transport and face-to-face consumption decreased, causing declines in transportation and warehousing (-11 points) and wholesale and retail (-5 points).

The January business outlook BSI for manufacturing rose 4 points from the previous month to 92. In particular, electronics, video, and communication equipment (+16 points) and metal processing (+7 points) continued to show positive prospects. The non-manufacturing outlook BSI fell 5 points from the previous month to 78. Declines were expected mainly in information and communication (-8 points) and construction (-5 points). This reflects the ongoing COVID-19 situation, seasonal factors such as the cold wave, and the contraction of the real estate market.

Meanwhile, the December Economic Sentiment Index (ESI) fell 1.7 points from the previous month to 104.6. The ESI is centered around a long-term average of 100; exceeding 100 means that the economic sentiment of all private economic agents, including companies and households, is better than the past average. The cyclical component rose 0.3 points from the previous month to 108.3.

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