Restaurant Sales Plummet Amid Weak In-Person Consumption... Non-Manufacturing Business Sentiment Declines (Comprehensive)

Non-Manufacturing Outlook 'Bleak' in January Next Year

The spread of COVID-19 and the strengthening of quarantine measures have deepened the worries of self-employed workers. On the 16th, a restaurant in Jung-gu, Seoul, was quiet. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Jang Sehee] As quarantine measures were strengthened and face-to-face consumption decreased, the sentiment in the service sector and other non-manufacturing industries slightly declined. With the prolonged COVID-19 pandemic and seasonal factors such as the winter cold wave coinciding, the non-manufacturing business conditions are expected to remain sluggish until early next year.

According to the "December 2021 Business Survey Index (BSI) and Economic Sentiment Index (ESI)" released by the Bank of Korea on the 29th, the non-manufacturing business conditions this month recorded 82, down 1 point from the previous month due to strengthened quarantine measures amid the spread of COVID-19. The transportation and warehousing sector fell by 11 points due to a decrease in passenger transport, and the wholesale and retail sector dropped 5 points due to a decline in offline sales. However, the information and communication sector rose 6 points thanks to increased software orders at the end of the year.

Despite the decline in the non-manufacturing business index, the overall industry BSI rose 1 point from last month to 87, as the manufacturing sector index increased. Manufacturing business conditions rose 5 points to 95, supported by strong exports. Although primary metals fell by 7 points, electronic, video, and communication equipment increased by 12 points, and metal processing rose by 9 points.

Kim Daejin, head of the Corporate Statistics Team at the Economic Statistics Bureau, explained, "The manufacturing sector reflects improvements in the semiconductor business conditions and increased operating rates of overseas factories." Regarding non-manufacturing, he analyzed, "With the spread of COVID-19, passenger transport, wholesale and retail, and accommodation sectors deteriorated, and factors such as the cold wave and concerns about the real estate market also had an impact."

In January next year, the sentiment in manufacturing and non-manufacturing sectors is expected to diverge. Manufacturing is projected to rise 4 points to 92, while non-manufacturing is expected to fall 5 points to 78 compared to this month. In particular, declines are anticipated mainly in information and communication (-8 points) and construction (-5 points). Accordingly, the overall business outlook is expected to decrease by 1 point from this month to 84.

The December Economic Sentiment Index (ESI), which combines the BSI with the consumer sentiment index, fell 1.7 points from the previous month to 104.6. This is interpreted as consumer sentiment contracting more significantly than corporate sentiment due to strengthened quarantine measures.

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