June business sentiment remains flat amid slow recovery in chip sector

South Korea’s semiconductor recovery has been slower than expected, with manufacturing sentiment remaining sluggish in June, according to a central bank survey.

According to the results of the June business survey index (BSI) released by the Bank of Korea on Thursday, the BSI for the manufacturing industry stood at 73 this month, the same as the previous month. The BSI rose from 63 in February, through 70 in March and April, to 73 in May and June.

The BSI is a statistical measure based on the assessment and outlook of entrepreneurs regarding the current business situation. If negative responses outweigh positive ones, the index falls below 100.

By sector, electronic, video and telecommunications equipment was down 7 points due to the delayed recovery in semiconductor prices, sluggish exports and weakness in semiconductor designers.

On the other hand, electrical equipment rose 12 points as demand for cables rose due to increased global infrastructure investment, and chemicals and products was up 5 points on demand for basic chemical products.

The manufacturing business sentiment BSI rose for large companies was up 4 points and companies focused on the domestic market but fell 4 points for small and medium-sized companies and 3 points for exporters.

The June non-manufacturing business sentiment BSI was 77, down one point from the previous month.

Among non-manufacturing industries, scientific and technical services fell 11 points. Wholesale and retail dropped 3 points and electricity, gas and steam 10 points due to seasonal slowdowns.

On the other hand, information and communications firms rose 5 points. This was due to an increase in roaming demand from overseas travelers as the Covid-19 pandemic eased, as well as an increase in overseas software sales.

The BSI for all industries, which combines manufacturing and non-manufacturing, was 76 in June, the same as the previous month.