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Korean Manufacturing BSI Drops to Lowest in 12 Quarters
Manufacturing BSI Falls from 87 to 77 in Q1
Korean Manufacturing BSI Drops to Lowest in 12 Quarters
  • By Jung Suk-yee
  • April 15, 2019, 11:23
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The sales index of the steel and metals sector fell by 24 points from 95 to 71 In the first quarter of the year.

Korean manufacturers say that business conditions in the first quarter of the year were the worst since the first quarter of 2016. In particular, they said that domestic demand, market conditions and sales significantly deteriorated from the previous quarter.

The Korea Institute for Industrial Economics and Trade (KIET) conducted a survey on 1,048 Korean manufacturing companies in order to calculate its Business Survey Index (BSI). The results released on April 14 showed that the market index fell by 10 points from 87 to 77 in the previous quarter and the sales index slid by 13 points to 75. Both items were at the lowest level in 12 quarters since the first quarter of 2016.

The BSI is calculated based on individual companies’ answers to questions regarding market conditions and business performances. When the index is over 100, it means improvement from the previous quarter. If it is less than 100, it means the opposite.

The domestic sale index fell by 11 points to 75 from 86 in the previous quarter while the export index dropped from 93 to 88, the recurrent profit from 84 to 78 and the cash flow index from 83 to 74. Facility investment edged up from 96 to 99 and employment from 95 to 97.

Observing sales indices by industries, all sectors recorded a drop, excluding shipbuilding and other transportation which posted an improvement from 82 to 88. In particular, steel and metals fell by 24 points from 95 to 71, while automobiles dropped from 92 to 69, electronics from 95 to 77 and electrical machinery from 91 to 76.

However, manufacturers expect the economy to improve somewhat in the second quarters of this year. The second quarter market outlook BSI was 98 while the sales forecast BSI 102. This means that the two items are expected to turn for a rise in four quarters. The domestic demand BSI is expected to surge from 84 to 100 and the export BSI from 93 to 101, topping over 100 in four quarters. The forecast also says that facility investment BSI and the employment BSI will swell as well.