Korea Productivity Center Develops Productivity Leading Sentiment Index (PNSI)

Early Detection of Productivity Changes
and Enhanced Policy Responsiveness Expected

The Korea Productivity Center (KPC) announced on September 2 that it has developed the "Productivity Leading Sentiment Index (PNSI)," an indicator designed to detect changes in productivity at an early stage.

Existing productivity indicators are largely lagging, making it difficult for policymakers to use them as tools for proactive responses to economic changes. In response, KPC has completed the development of a new indicator capable of detecting productivity changes early by utilizing artificial intelligence (AI), big data analytics, and natural language processing (NLP).

The Productivity Leading Sentiment Index (PNSI) was developed to reflect the impact of corporate and consumer sentiment on productivity amid the recent global economic slowdown and heightened uncertainty. For the development of this indicator, KPC collected and analyzed productivity-related news from 40 major media outlets over a 10-year period from 2015 to 2024.Labor input factors such as employment and working hours were classified as input indices, while output factors such as production volume, technological innovation,·and added value were classified as output indices. Based on this, the Productivity Leading Sentiment Index (PNSI) was derived.

KPC explained that the Productivity Leading Sentiment Index showed a high correlation with labor productivity in the manufacturing sector, and in particular, the output index demonstrated leading characteristics of up to one year and six months. This means that the positive or negative trends in news reports appear ahead of actual productivity indicators, making this a useful tool for detecting changes in productivity in advance.

KPC expects that this new index can be used for: ▲ establishing industry-specific support measures; ▲ strengthening national competitiveness monitoring; and ▲ building an early warning system for productivity. In particular, it has laid the foundation for tracking productivity trends on a monthly basis, supplementing the time lag limitations of traditional quarterly and annual productivity statistics.

Park Sungjung, Chairman of KPC, stated, "The Productivity Leading Sentiment Index overcomes the limitations of existing lagging productivity indicators and can make a significant contribution to enhancing national productivity in an increasingly uncertain global economic environment."

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