Industrial Research Institute Reports Decline in Sales Across All Sectors in Q1... "Q2 Challenges Expected in Automobile and Textile Industries"

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[Asia Economy Reporter Moon Chaeseok] In the first quarter, sales across all industries, centered on consumer goods, significantly deteriorated. Negative outlooks prevailed in many sectors, including new industries, for the second quarter as well.

According to the 'Manufacturing Business Survey Index (BSI) Results' released by the Korea Institute for Industrial Economics and Trade on the 15th, the BSI for market conditions and sales status in the first quarter of this year were 71 and 70 respectively, sharply down from 84 and 85 in the previous quarter.

The institute conducts a quarterly manufacturing BSI survey targeting domestic manufacturers. Since the third quarter of 2019, the industry classification has been revised and applied, and the first quarter survey this year was conducted from March 12 to 24, targeting 1,030 companies.

The responses are calculated as an index ranging from 0 to 200, with 100 as the baseline; values closer to 200 indicate an increase (improvement) compared to the previous quarter, while values near 0 indicate a decrease (deterioration).

Domestic demand in the first quarter stood at 71, down 15 points from 86 in the previous quarter, and exports fell from 90 to 75.

Facility investment dropped below the baseline again to 97 after one quarter, and employment fell to 96, failing to maintain the rebound from the previous quarter's 99.

The sales status BSI in the first quarter sharply declined across all types of industries and companies.

The new industry sector plunged 31 points from 101 in the previous quarter to 70, and the Information and Communication Technology (ICT) sector (67), machinery sector (67), and materials sector (65) also turned downward.

Both large enterprises (74) and small and medium enterprises (66) experienced double-digit declines compared to the previous quarter (96, 85).

By detailed industry, consumer goods-related sectors such as wireless communication devices, home appliances, automobiles, and textiles showed significant declines.

Wireless communication devices dropped from 89 to 68, home appliances from 81 to 58, automobiles from 87 to 58, and textiles from 83 to 50, with decreases around 30 points.

Display (78) was the only sector to show an increase compared to the previous quarter (73).

The outlook for the second quarter is not very bright either.

The market condition outlook BSI fell by 1 point from 86 in the previous quarter and further dropped by 2 points to 84. Sales rose by 2 points to 88 but still fell significantly short of the baseline.

Domestic demand also rose by 2 points but remained at 88, while exports (87), facility investment (97), and employment (97) declined compared to the previous quarter.

By sector, only the ICT sector (92) rose by 9 points from the previous quarter, while the machinery sector (82) and materials sector (81) declined by 7 and 4 points respectively. The new industry sector sharply fell from 105 to 84.

Outlooks for large enterprises (90) and small and medium enterprises (83) also decreased by 7 and 4 points respectively.

By detailed industry, sales outlook BSI for semiconductors (93), home appliances (87), and chemicals (96) continued to rise from the previous quarter, and display (99) and wireless communication devices (93) also increased by 24 and 13 points respectively, approaching the baseline.

However, the outlook remains pessimistic for automobiles (79) and textiles (65), with expectations of continued sluggishness.

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