"Strong Exports and Consumer Coupons Drive Business Sentiment Improvement After Three Months"
CBSI Rises to 91.0 in August,
Driven by Strong Semiconductor Exports and Consumer Coupon Effects
Both Manufacturing and Non-Manufacturing Sectors Rebound;
Improvement Expected to Continue Next Month
The business sentiment index for all industries rebounded in August for the first time in three months. This turnaround was attributed to a reduction in trade uncertainty following the conclusion of tariff negotiations, as well as strong exports of key items such as semiconductors. The non-manufacturing sector also showed improvement, benefiting from the effect of consumer coupons aimed at revitalizing livelihoods and the seasonal boost from the summer holiday period.
According to the "August Business Survey Results and Economic Sentiment Index (ESI)" released by the Bank of Korea on August 27, the Composite Business Sentiment Index (CBSI) for all industries this month was 91.0, up 1.0 points from the previous month. The CBSI is a business sentiment indicator calculated using major indices from the Business Survey Index (BSI). A reading above 100 indicates that companies' expectations for the economic situation are more optimistic than in the past, while a reading below 100 indicates a more pessimistic outlook.
Lee Hyeyoung, head of the Economic Sentiment Survey Team at the Economic Statistics Department 1 of the Bank of Korea, explained, "The conclusion of tariff negotiations has reduced trade-related uncertainty, and exports, particularly in semiconductors and automobiles, have shown strong performance." She added, "The non-manufacturing sector also improved, especially in the transportation and warehousing and wholesale and retail industries, due to the combined effects of consumer coupons aimed at revitalizing livelihoods and the summer holiday season."
This month, the CBSI for manufacturing rose by 1.4 points from the previous month to 93.3. The main factors driving this increase were product inventory (up 0.6 points) and business conditions (up 0.4 points). Manufacturing performance improved mainly in automobiles, other machinery and equipment, and electrical equipment. For automobiles, the slowdown in the decline of exports to the United States and the overall increase in exports contributed to the improvement. In other machinery and equipment, increased exports of semiconductor manufacturing equipment to the United States and Taiwan, as well as a rise in orders related to the defense industry, were key factors. For electrical equipment, the expansion of electric vehicle sales and the construction of renewable energy facilities in the United States led to improvements, especially for battery and insulated wire and cable companies.
The CBSI for non-manufacturing also rose by 0.7 points to 89.4. The main factors for this increase were business conditions (up 0.4 points) and sales (up 0.3 points). Non-manufacturing performance improved mainly in wholesale and retail, and transportation and warehousing. In wholesale and retail, the use of consumer coupons aimed at revitalizing livelihoods and the return of medical residents led to improvements, particularly among distribution and pharmaceutical companies. The transportation and warehousing sector saw a recovery, especially in passenger transportation, as the number of travelers increased during the holiday season.
The business sentiment outlook for next month was surveyed at 91.8, up 3.4 points from the previous month. The manufacturing sector is forecast to rise by 1.1 points to 92.1, while the non-manufacturing sector is expected to increase by 4.7 points to 91.5. The outlook for manufacturing in September is expected to recover, led by shipbuilding and other transportation, rubber and plastics, and electrical equipment. Next month, the non-manufacturing outlook is expected to improve, especially in transportation and warehousing, wholesale and retail, and services related to arts, sports, and leisure.
Lee commented, "The business outlook generally follows a similar trend to actual performance. The significant improvement in the non-manufacturing outlook is due to performance improvements across most non-manufacturing industries." She also anticipated that sectors experiencing a downturn would see better prospects next month as the off-season passes. However, she cautioned, "The outlook does not always translate directly into next month's performance, so we will need to monitor the actual figures."
The Economic Sentiment Index (ESI), which combines the BSI and the Consumer Sentiment Index (CSI), rose by 1.7 points from the previous month to 94.6. The cyclical variation, which excludes seasonal factors, was 92.4, up 0.8 points from the previous month.
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Meanwhile, this survey was conducted from August 11 to 19, targeting 3,524 incorporated companies nationwide. Of these, 1,843 were manufacturing companies and 1,457 were non-manufacturing companies, with a total of 3,300 responses, representing a response rate of 93.6%.
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