Korea’s manufacturing sentiment for Q3 turns sharply negative

2018.07.09 13:25:03 | 2018.07.09 14:40:24

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South Korean manufacturers have turned negative about business conditions both at home and abroad amid escalating trade war and worsening domestic economy.

According to a survey on 595 manufacturers by the Korea Institute for Industrial Economics & Trade, the business sentiment index (BSI) for the third quarter sharply deteriorated across the board compared with the second quarter.

The indices for outlook on business conditions and sales moved down six points to 96 and 99 respectively, against the reading in the previous quarter.

The quarterly survey indicates the direction of change in overall factory business activity - production, shipment, inventories, capacity utilization, employment, and investment. In the institute’s scale, 0 indicates an extreme lack of confidence and 200 extreme confidence.

Separate indices predicting conditions for domestic economy and exports both fell below the 100 neutrality threshold, each at 96 and 97, down seven and six points, respectively.

The same went for conditions for capital investment and employment at 96 and 97, respectively. The cutback in workweek hours starting July and a hike in minimum wage are projected to have dampened sentiment for hiring and investment.

Only three sectors remained buoyant about the third quarter - semiconductors (105), refined machinery (105), and chemicals (102) - while sentiment in seven other sectors all hovered under 100, including electronics (98), steel metal (95), textile (94), and machine equipment (93).

Prospects for the shipbuilding industry stayed downbeat at 93. The automotive sector was the most pessimistic at 90, losing 9 points from the previous quarter, as Washington flags the possibility of slapping 25 percent duties on all automobile imports.

Business confidence of large manufacturers was at 105 and that of small- to mid-sized segment at 96.

By Seok Min-soo and Kim Hyo-jin

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