Semiconductor Industry Slump Keeps Corporate Sentiment Stagnant

Although exports of eco-friendly vehicles such as electric cars are performing well, the business sentiment among companies remained at the same level as last month due to the continued downturn in the semiconductor industry.

According to the results of the April Business Survey Index (BSI) released by the Bank of Korea on the 27th, the BSI for business conditions across all industries this month recorded 72, the same as the previous month. This index reflects business owners' judgments and outlooks on current business conditions, and a value below 100 indicates poor business conditions.

By industry, the manufacturing sector's BSI remained unchanged at 70 compared to the previous month.

By detailed sector, chemical substances and products (+8 points) and automobiles (+6 points) showed increases. Sales of chemical products rose due to increased global demand, and production and exports increased mainly for eco-friendly vehicles with higher unit prices. On the other hand, due to the global semiconductor slump, inventories increased and business conditions worsened, causing electronics, video, and communication equipment (-3 points) to decline, and the drop in steel product prices led to a deterioration in business conditions for primary metals (-9 points) and others.

By company size, small and medium-sized enterprises (SMEs) (+2 points) showed an increase, export companies and domestic companies remained the same as the previous month, while large companies (-1 point) declined.

The BSI for non-manufacturing industries also remained steady at 74, the same as the previous month. Construction (+7 points) and business facility management, business support, and rental services (+4 points) increased, while wholesale and retail (-4 points) and information and communication (-6 points) declined.

In the case of construction, business conditions improved due to an increase in the progress rate of construction work caused by seasonal factors and an increase in new orders for civil engineering projects. Additionally, demand for facility management, manpower dispatch, and events increased as face-to-face activities rose due to mild spring weather. On the other hand, wholesale and retail worsened due to the off-season sales period caused by seasonal factors in some sectors and rising costs. The information and communication sector declined as movie theater attendance decreased and advertising demand fell.

The BSI outlook for business conditions in May was surveyed at 74, up 1 point from this month’s 73. Manufacturing rose by 3 points to 72, and non-manufacturing increased by 1 point to 76.

The Economic Sentiment Index (ESI) for April, which reflects both the BSI and the Consumer Sentiment Index (CSI), recorded 93.8, up 2.3 points from the previous month. The ESI shows the economic sentiment of all private economic agents.

Hwang Hee-jin, head of the Statistical Survey Team at the Bank of Korea’s Economic Statistics Bureau, explained, "This month’s BSI showed varied patterns across industries amid ongoing economic uncertainties," adding, "BSI is rising mainly among SMEs rather than large companies, and among domestic companies rather than export companies." Hwang said, "The business conditions of large companies are not good, with a growing trade deficit and a continued slump in semiconductors, which have a large export share. However, some SMEs in semiconductor equipment and primary metals sectors showed high figures."

[Image source=Yonhap News]

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