Easing of Social Distancing Leads to Corporate Sentiment Rebound After 4 Months

Service and Non-Manufacturing Business Sentiment Hits Highest in 11 Years

On the 21st, when social distancing measures were fully lifted, the Starfield COEX Mall in Gangnam-gu, Seoul, was crowded with citizens./Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Seo So-jeong] Corporate sentiment rebounded thanks to a decrease in COVID-19 cases, the lifting of social distancing measures, domestic demand recovery, and strong exports.

According to the Bank of Korea's "April 2022 Business Survey Index (BSI) and Economic Sentiment Index (ESI)" released on the 28th, the BSI for all industries this month rose 3 points from the previous month to 86, marking an upward trend for the first time in four months.

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. The index rose to 87 in December last year but declined for three consecutive months from January this year before rebounding this month.

By sector, the non-manufacturing business condition BSI increased by 4 points from the previous month to 85. This is the largest increase since October 2021 (5 points) and the highest level in 11 years since April 2011 (85). Information and communication (+8 points), professional, scientific, and technical services (+5 points), and wholesale and retail trade (+3 points) all rose.

Manufacturing also recorded a 3-point increase from the previous month to 87. The rise was centered on electrical equipment (+10 points), other machinery and equipment (+7 points), and electronic, video, and communication equipment (+2 points). The Bank of Korea explained, "Demand for industrial cables and automobile-related electrical equipment increased," adding, "Orders for semiconductor and construction-related machinery increased, sales of semiconductors and related parts rose, and orders for electronic components also improved."

By company size and type, large enterprises (+2 points), small and medium enterprises (+5 points), export companies (+1 point), and domestic companies (+5 points) all showed increases.

The BSI for business outlook in May also rose 3 points from the previous month to 86. The manufacturing business outlook BSI increased 3 points to 88, led by chemical products (+9 points) and electrical equipment (+9 points). The non-manufacturing business outlook BSI rose 3 points to 85, driven by information and communication (+10 points) and wholesale and retail trade (+6 points).

Meanwhile, the Economic Sentiment Index (ESI) for April rose 2.3 points from the previous month to 105.7. The ESI, centered around a long-term average of 100, indicates that when it exceeds 100, the economic sentiment of all private economic agents, including companies and households, is better than the past average.

The seasonally adjusted ESI cyclical component was 103.1, down 0.9 points.

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