Korea¡¯s business pessimism eases, with exporters turning most upbeat in 9 yrs

South Korea¡¯s business sentiment rebounded in January with exporters turning the most optimistic in nine years as the coronavirus spread in the country showed signs of leveling off, and expectations for the global economic recovery grew.

The business sentiment index (BSI) for January was 77, up 2 points from the previous month, the Bank of Korea said Thursday.

The BSI in December skidded for the first time in three months as Korea battled another virus outbreak, reporting daily new cases above 1,000. The numbers have dropped to about 400 to 500 in recent weeks.

A reading of lower than 100 means there are more pessimists than optimists.

The study was conducted on Jan. 12-19 against 2,797 businesses, including 1,634 in manufacturing and 1,163 in the non-manufacturing sector.

The BSI for manufacturers rose 3 points to 85 in January. The index for the non-manufacturing sector, including services, climbed 2 points to 70.

In manufacturing, chemical materials and products plunged 8 points but this was offset by a 14-point rise in rubber and plastic and 13-point jump in metal processing.

In non-manufacturing, electricity/gas/steam surged 14 points on increased heating. Retail and wholesale also gained 11 points on recovering domestic demand. IT and communication fell 4 points due to reduced IT service orders.

The BSI for big manufacturers also rose from 89 to 91, the highest since April 2014. The index for smaller businesses edged up to 78 from 74.

The BSI for exporters surged by as much as 7 points to 96, the highest since May 2011. Non-exporters remained the same at 78.

An unnamed official from the Bank of Korea said signs of recovery in exports are reflected in the latest business sentiment, but remained cautious about the long-term trend due to Covid-19 outbreak conditions.

The BSI outlook for February improved to 75 from 70. Manufacturing gained 4 points to 81 and non-manufacturing 6 points to 70.

The rise was led by rubber/plastic (16 points) and metal processing (14 points). Other machinery and equipment also rose 10 points on anticipated demand for industrial and chipmaking facilities.

Big companies rose 4 points to 89 and small companies 6 points to 73. Exporters gained 1 point to 89 and non-exporters 6 points to 76. The index for big companies and exporters were both the highest since January 2018.

The economic sentiment index (ESI), which reflects both the BSI and consumer sentiment index, rose 7.0 points to 93.1. The seasonally adjusted ESI was 92.7, up 2.8 points from the previous month.

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