October Economic Outlook Also Weak... BSI 89.6 Reenters 80s After One Month

Manufacturing (88.4) and Non-Manufacturing (91.1) Both Show Consecutive Decline for 5 Months Starting June This Year

[Asia Economy Reporter Park Sun-mi] The Business Survey Index (BSI) outlook, which indicates companies' economic prospects, plummeted to the 80s in October. Both manufacturing and non-manufacturing sectors are sluggish, making a prolonged deterioration in corporate performance inevitable.

On the 26th, the Federation of Korean Industries conducted a Business Survey Index targeting the top 600 companies by sales, revealing that the BSI outlook for October recorded 89.6. The BSI outlook has been declining for five consecutive months since April this year (99.1), dropping to 86.9 in August, rebounding to 95.8 in September, but falling back to the 80s within a month.

The actual BSI for September was 86.0, indicating that corporate performance deterioration has been prolonged as it remained below the baseline of 100 for eight consecutive months since February this year (91.5).

In October, the BSI by sector showed that manufacturing (88.4) and non-manufacturing (91.1) have both been sluggish simultaneously for five consecutive months since June this year. Among manufacturing sectors, industries including the country's top three export items (electronics & telecommunications, automobiles & other transportation, petroleum refining & chemicals) all showed poor performance. This is the first time in six months since April 2022 that the three major export-driven sectors have simultaneously shown a poor outlook. This suggests that the recession in our export-dependent economy may deepen.

Among non-manufacturing detailed industries, only leisure, accommodation, and food service sectors (111.1), which include sports and performance viewing, showed a positive outlook due to the reduction in COVID-19 daily new cases falling below 100,000 in September, easing infection concerns. Meanwhile, electricity, gas, and water supply (82.4) are expected to be the most sluggish due to rising fuel costs.

Looking at the BSI by sector in October, all sectors showed a negative outlook simultaneously for the first time in 1 year and 9 months since January 2021. In particular, employment (99.4) fell below the baseline (100) for the first time in 1 year and 7 months since March 2021 (99.5).

There are concerns about a chain contraction in future production, investment, and employment. Choo Kwang-ho, head of the economic division at the Federation of Korean Industries, stated, “Domestic companies are facing a complex crisis due to increased production costs caused by the prolonged 'three highs' of high inflation, high interest rates, and high exchange rates, along with sales slowdown from domestic and international economic recessions.” He added, “It is necessary for the government to promptly implement measures to revitalize corporate activities, such as corporate tax reform and flexible working hours, to alleviate the management burden on companies.”

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