Manufacturers’ sentiment marks record-low since 2009

Weighed down by the prolonged COVID-19 pandemic, South Korean manufacturers saw their business confidence sink to the lowest level in over 12 years for the upcoming month, central bank data showed Wednesday.

The business sentiment index -- BSI -- for the domestic manufacturing sector came to 49 for June, down from 50 for this month, according to the Bank of Korea.

While a reading below 100 indicates a pessimist market sentiment, the latest figure marked the lowest since February 2009, in the wake of the global financial crisis.

The manufacturing BSI has remained on a downturn trend since February this year, shortly after the country reported its first confirmed case of the new coronavirus on Jan. 20.

The business sentiment for medical substances and supplies climbed, on the back of mounting demand for patient treatment and potential cure, but traditional backbone industries such as automobile and chemicals marked a decline in BSI.

Also, the BSI for small and medium-sized companies for June came to 41, down 4 points from May, reaching the lowest level since the BOK started compiling such data in 2003.

The corresponding survey was conducted from May 12 to 19 on 3,696 domestic companies, according to BOK officials.

“As conglomerates continue to struggle with the disturbed global value chain, domestic-focused small businesses are facing delays or setbacks in their production and delivery timeline,” said an official of the central bank.

The latest warning signals from the manufacturing sector reflected the continued economic fallout of the epidemic crisis, despite the recent slow pace of new infections here.

Asia’s fourth-largest economy saw its exports nosedive 24.3 percent on-year in April, while its trade balance turned into the red for the first time in 99 months, according to the Korea Customs Service. The accumulated export volume for the first 20 days of this month marked a 20.3 percent dip from the same period last year.

The gross domestic product growth is estimated to near the zero level this year, with the state-affiliated Korea Development Institute suggesting a 0.2 percent growth on-year and the BOK set to lower its forecast plausibly to a zero percent range from the former 2.1 percent.

Meanwhile, the BSI of non-manufacturing businesses came to 56 for June, up from 50 for this month and turning into an uptrend for the first time in five months, according to the BOK.


By Bae Hyun-jung (tellme@heraldcorp.com)