Corporate Business Sentiment Worsens Further: "Tariff Uncertainties Lead to Fewer Orders"

July Corporate Business Sentiment Index (CBSI) at 90.0, Down 0.2 Points
Non-Manufacturing Sector Improves, but Manufacturing Decline Drags Index Down
"Tariff Uncertainties Affecting Downstream Industries"

The Corporate Business Sentiment Index (CBSI) for July deteriorated compared to the previous month. Despite improvements in the non-manufacturing sector due to increased demand for electricity for cooling, the downturn in manufacturing pulled the index down. The manufacturing sector continued to suffer from tariff uncertainties, leading to poor performance in the automobile and steel industries, with the impact spreading to downstream industries.

According to the "July Business Survey Results and Economic Sentiment Index (ESI)" released by the Bank of Korea on the 24th, the CBSI for all industries this month was 90.0, down 0.2 points from the previous month. The CBSI is a business sentiment indicator calculated using key indices from the Business Survey Index (BSI). A reading above 100 indicates that companies are more optimistic about the economic outlook than in the past, while a reading below 100 indicates pessimism.

While the non-manufacturing index rose, the manufacturing index declined. The manufacturing CBSI fell by 2.5 points from the previous month to 91.9, as the indicators for new orders (-0.8 points) and production (-0.6 points) both declined.

This month, manufacturing performance worsened, particularly in automobiles, petroleum refining and coke, and electronics, video, and telecommunications equipment. In the automobile sector, exports to the United States decreased due to U.S. tariffs and increased local production, and the number of business days was reduced due to the summer vacation period. The petroleum refining and coke sector saw both business conditions and production worsen as Singapore refining margins fell. For electronics, video, and telecommunications equipment, performance was sluggish due to concerns over U.S. tariffs on semiconductor items and a decline in exports of wireless communication devices.

The non-manufacturing CBSI rose by 1.3 points from the previous month to 88.7, as business conditions improved due to increased demand for data and artificial intelligence (AI) system construction, as well as electricity for cooling.

There is a growing possibility that the CBSI will fall into the 80-point range next month, as it is expected to decline further. The CBSI outlook for August was surveyed at 88.4, down 1.0 point from the previous month. The non-manufacturing sector is expected to rise by 0.1 point to 86.8, while the manufacturing sector is expected to fall by 2.4 points to 91.0. In particular, business conditions, orders, and production performance in electronics, video, and telecommunications equipment, metal processing, and chemicals and chemical products are expected to deteriorate. The CBSI had dropped to the 80-point range in December last year due to the impact of the 12·3 Martial Law, and only returned to the 90-point range in May of this year.

Lee Hyeyoung, head of the Economic Sentiment Survey Team at the Bank of Korea's Economic Statistics Department 1, explained, "Recently, as the results of tariff negotiations have not been released, related uncertainties remain, and there is ongoing talk of additional tariffs on specific items. These factors have been reflected in the survey." She added, "Sectors with poor performance this month are also expected to perform poorly in August. The automobile and steel industries, where item-specific tariffs have been implemented, are showing weak results, and other sectors such as general machinery equipment and rubber and plastics are also experiencing a decline in new orders due to tariff uncertainties, which has had an impact."

She continued, "Monitoring by sector shows that upstream industries such as metal processing and other basic chemical parts are also being affected. As tariff uncertainties increase, there are also opinions that export contracts are being put on hold or new orders are decreasing."

The Economic Sentiment Index (ESI), which combines the Business Survey Index (BSI) and the Consumer Sentiment Index (CSI), recorded 92.9 in July, up 0.1 point from the previous month. The cyclical variation, which removes seasonal factors, was 90.9, up 0.6 points from the previous month.

Meanwhile, this survey was conducted from July 9 to 16, 2025, targeting a total of 3,524 corporate entities nationwide. A total of 3,293 companies (93.4%) responded, with 1,839 in manufacturing and 1,445 in non-manufacturing.

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