August BSI 93.5 'Sluggish'... Semiconductor Business Outlook Recovers for the First Time in 11 Months

While domestic companies' economic outlook for August still signals negativity, the semiconductor industry's economic outlook, which has a high proportion of investment and exports, has turned to a recovery trend for the first time in 11 months.

On the 26th, the Federation of Korean Industries (FKI) announced the results of a Business Survey Index (BSI) conducted on the top 600 companies by sales, revealing that the BSI outlook for August recorded 93.5. The BSI outlook has remained below the baseline of 100 for 17 consecutive months since April last year (99.1). A BSI above the baseline of 100 indicates a positive economic outlook compared to the previous month, while a BSI below 100 indicates a negative economic outlook.

Trends in Electronic and Communication Equipment BSI

The actual BSI for July recorded 94.9, showing a continuous downturn for 18 consecutive months since February last year (91.5). This means that companies' performance deterioration is ongoing.

The August sectoral BSI showed simultaneous weakness in manufacturing (91.8) and non-manufacturing (95.2). Last month, the non-manufacturing BSI exceeded the baseline at 101.6 for the first time in 14 months since May 2022 (102.0). However, it fell below the baseline again after just one month, indicating a negative economic outlook. Manufacturing has remained below the baseline for 17 consecutive months since April 2022 (94.8).

Among manufacturing sectors, three industries?food and beverages, pharmaceuticals, and electronic and communication equipment?hovered around the BSI baseline of 100. In particular, the electronic and communication equipment sector, which includes semiconductors, recorded a BSI of 100.0, recovering the baseline for the first time in 11 months since September 2022 (117.6). The remaining seven manufacturing sectors (▲metal and metal products (82.1), ▲non-metallic materials and products (83.3), ▲general and precision machinery and equipment (85.0), ▲wood and furniture (85.7), ▲textiles and apparel (92.3), ▲automobiles and other transportation equipment (93.9), ▲petroleum refining and chemicals (96.4)) all remained below the baseline of 100, signaling sluggish business conditions.

Key sectors that can drive economic growth such as domestic demand (95.4), exports (93.5), and investment (94.4) still show negative economic outlooks. Since July 2022, domestic demand, exports, and investment have all failed to exceed the baseline for 14 consecutive months. Choo Kwang-ho, head of the Economic and Industrial Headquarters at FKI, diagnosed that “companies are experiencing prolonged economic sentiment downturn due to sales slowdown and inventory increases caused by the ongoing economic recession.” He advised, “To enhance corporate vitality, bold regulatory innovation should be pursued, along with continuous efforts to reform the labor market and improve tax competitiveness.”

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