Arya News - Manufacturing outlook surges as services sector lags.
SEOUL – South Korea’s business sentiment turned positive for the first time in four years for the March period, buoyed by robust semiconductor and automobile exports, signaling that corporate confidence may be broadly recovering after a prolonged slump.
The Federation of Korean Industries said Tuesday its business survey index, or BSI, a monthly poll of the country’s top 600 companies by sales, rose to 102.7 for next month.
It marked a notable turnaround, as the index had remained below the threshold for 47 consecutive months since last reaching 102.1 in March 2022.
The BSI is compiled through surveys of companies measuring their level of optimism about current economic conditions and their outlook for the following month.
The index reflects corporate perceptions of the business environment. A reading above 100 indicates more companies expect conditions to improve than worsen compared with the previous month, while a reading below 100 signals the reverse.
The rebound was fueled largely by the manufacturing sector, whose BSI jumped sharply to 105.9 in March from 88.1 in February. The figure marked the highest level in about five years since a reading of 108.6 in May 2021.
Among the 10 manufacturing sectors, six recorded positive outlooks. General and precision machinery and equipment — a category that includes semiconductor — reported the highest figure at 128.6, followed by pharmaceuticals at 125.0, textiles and apparel, leather and footware at 114.3 and electronics and telecommunication equipment sector at 113.3.
Meanwhile, three sectors, including wood, furniture and paper; petroleum, refining and chemicals; and non-metallic materials and products, hovered at the neutral level. Only the food, beverage and tobacco sector remained below 100.
The business lobby group attributed the sudden improvement to a surge in exports of key products such as semiconductors, automobiles and computers.
According to data from the Ministry of Trade, Industry and Resources, semiconductor exports hit a record $20.54 billion in January, more than doubling compared to the same period last year, and surpassing the $20 billion mark for a second consecutive month.
Amid the global aritificial intelligence boom, South Korea’s semiconductor exports have surged, driven by strong demand and elevated prices for advanced memory chips, particulalry high-bandwidth memory that is used in AI accelerators, and advanced DRAM.
Automobile exports also rose 21.7 percent on-year to $6.07 billion, the second-highest January figure on record.
The outlook for non-manufacturing sectors, however, remained pessimistic, with the figure edging down to 99.4. Still, retail and wholesale businesses posted a strong outlook at 111.8, while leisure, hospitality and dining reached 108.3, suggesting a gradual recovery in domestic consumer spending.
By category, the export sector’s outlook reached 100, its highest level since June 2024, while domestic demand, investment and employment remained pessimistic, despite improving from the previous month.
“The improvement in business confidence, which had been sluggish for an extended period amid economic downturn, is a very meaningful change,” said Lee Sang-ho, head of economic and industrial research department at the FKI. “The National Assembly and the government need to maintain the economic momentum to revitalize business through regulatory reform so that the improvement does not remain a short-term rebound.”