BSI in Increase
As concerns over Brexit have slightly abated, South Korean manufacturers' business sentiments have rebounded in July for the first time in three months.
According to the data of the business survey index (BSI) for July released by the Bank of Korea (BOK) on July 29, the BSI of manufacturing firms here came to 72, up 1 point from the previous month. The BSI of manufacturing firms reached a low point of 63 in February. Then, the figure increased for two months in a row to 68 in March and 71 in April, and remained still for two consecutive months until June. The BSI for August came to 71, down 1 point from a month earlier. The BSI is an index measuring firms’ actual economic sentiment. A reading above 100 means optimists outnumber pessimists, while a reading below the benchmark means the opposite.
The BSI of electronic, image and communication equipment firms increased by 10 points to 76 for July from 66 a month ago, as the demand of components grew before the release of new smartphones. The figure of oil refinery and cokes firms stood at 82, up 15 points from the previous month since the refining margin in the petrochemical sector rose due to the increase in ethylene prices. The BSI of shipbuilding and transportation firms, which showed a rapid fall from restructuring a month earlier, increased to 40 from 29 for June. By contrast, the BSI of primary metal firms decreased to 67 from 80 in the previous month due to the anti-dumping sanctions of the U.S. and the decrease in steel product prices, while the figure of automobile firms dropped to 80 from 88 a month ago due to the end of the government's consumption tax reduction on vehicles.
The BSI of conglomerates and small and mid-size firms stood at 78 and 64, up 2 point and 1 point from the previous month, respectively. The figure of export firms rose from 71 for June to 74 for July, while its domestic firms remained the same at 71 over the period. In the survey, 24.8 percent of manufacturing firms said the weak domestic demand is the biggest difficulties in business, but the figure decreased by 1.4 percent point from the previous month. On the other hand, 20.7 percent of the participants said the uncertain economic conditions are the biggest problem they face, up 1.9 percent point from a month earlier.
The BSI of non-manufacturing firms slipped to 70 for next month from 72 for July. The Economic Sentiment Indicator (ESI), a composite of the BSI and the Consumer Survey Index (CSI), grew 1 point to 93 for July, compared with the previous month.
Meanwhile, a total of 2,882 large and small and medium-sized firms participated in the survey from July 15 to 22.