"Inventory Down Due to Raw Material Supply Disruptions" Business Sentiment Hits 1 Year, 9 Month High

April Composite Business Sentiment Index Rises to 94.9, Up 0.8 Points

Strong Exports and Higher Sales Prices Drive Improvement in Manufacturing Conditions

Companies Respond to Demand by Utilizing Existing Inventory Amid Raw Material Supply D

Corporate business sentiment rebounded in just one month, reaching its highest level in one year and nine months. Despite rising raw material prices due to the Middle East conflict and production disruptions in some sectors, strong export performance led to increased manufacturing sales and new orders. In addition, disruptions in raw material supply resulted in decreased product inventories, which in turn prompted more active utilization of existing inventories, contributing to these results.

According to the "April 2026 Business Survey Results and Economic Sentiment Index (ESI)" released by the Bank of Korea on the 28th, this month’s Composite Business Survey Index (CBSI) for all industries stood at 94.9, up 0.8 points from the previous month. This marks the highest level since July 2024 (95.9), a span of one year and nine months.

The CBSI is an indicator of business sentiment, calculated using key indices from the Business Survey Index (BSI) to comprehensively assess corporate perceptions of the overall economy. The long-term average (from January 2003 to December 2025) is set at 100. If the index is above 100, corporate expectations for the economy are viewed as more optimistic than the long-term average; below 100, they are interpreted as pessimistic.

Lee Heunghoo, head of the Economic Sentiment Survey Team at the Economic Statistics Department 1 of the Bank of Korea, explained the improvement in business sentiment this month: "While the manufacturing sector improved in part due to continued strong exports and rising sales prices, the most significant factor was the decrease in product inventories, as companies responded to demand by using existing stocks amid raw material supply disruptions."

The index for manufacturing rose by 2.0 points from the previous month to 99.1, while the non-manufacturing sector increased by 0.1 point to 92.1. Notably, not only large manufacturers—who have reached the benchmark of 100—but also small and medium-sized enterprises (96.8) achieved their highest levels since July 2023 (99.1), indicating a marked improvement in sentiment.

In April, performance in the manufacturing sector improved, particularly among chemicals and chemical products, primary metals, and fabricated metals, all of which saw increases in product sales prices. For chemicals and chemical products, the ethylene-naphtha spread widened due to higher product prices, and export performance improved. Primary metals benefited from both rising product prices and a stronger exchange rate, which aided export companies. Fabricated metals also saw price increases, and the seasonal expansion in demand from downstream industries such as construction materials and agricultural supplies had a positive effect.

Non-manufacturing performance was mixed: sectors such as wholesale and retail trade declined, while construction and information and communications rose. Wholesale and retail trade saw a downturn as energy and pharmaceutical wholesalers were affected by rising raw material prices and weakened consumer sentiment. In contrast, the construction sector’s performance improved, led by general contractors handling plant equipment projects and by increased overseas orders. The information and communications sector was positively impacted by the launch of new game software titles and cost reductions in selling and administrative expenses for existing games.

The outlook for next month’s business sentiment index also rose by 0.8 points from the previous month to 93.9. Manufacturing is expected to rise by 2.1 points to 98.0, while non-manufacturing is projected to remain unchanged at 91.2. The manufacturing outlook is particularly strong for chemicals and chemical products, as well as primary metals. The automobile sector is also on an upward trend. In non-manufacturing, sectors such as electricity, gas, and steam are expected to improve, while wholesale and retail trade are forecast to decline.

The ESI, which combines the BSI and the Consumer Sentiment Index (CSI), fell by 2.3 points from the previous month to 91.7. The cyclical variation, adjusted for seasonal factors, was 94.4, down 0.3 points from the previous month.

This survey was conducted from April 9 to April 16, targeting 3,524 corporate entities nationwide. Responses were received from 1,781 manufacturing firms and 1,424 non-manufacturing firms, totaling 3,205 companies (90.9% response rate).

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