A negative sentiment continues to pervade in the Korean business landscape in terms of its outlook for June.

According to the business survey index (BSI) released by the Federation of Korean Industries (FKI) on Tuesday, the BSI for June stood at 90.9, hovering under the benchmark of 100 for 15 months in a row now, since April last year.

A BSI above the benchmark of 100 indicates that companies are more optimistic about the economy than in the previous month, and an index below 100 indicates a negative outlook compared to last month. The survey asks 600 businesses about their predicted sales for the next month.

“Overall business sentiment has been weak due to poor performance affected by the deepening economic downturn. The taxation framework and labor market reform and faster deregulation are sought to invigorate business activities,” said Chu Kwang-ho, head of the federation’s Economic and Industrial Division.

The figures of both the manufacturing and non-manufacturing segments have been below 100 for 13 months in a row now, since June last year.

Breaking down the manufacturing segment, only three industries - automobiles and other transportation equipment, pharmaceuticals, and base metals - stood at about the benchmark, and seven other industries had dismal outlooks, including wood and furniture at 60, metal and metal products at 81.3, textiles and apparel at 85.7, petroleum refining and chemicals at 88.9, food and beverages at 94.7, electronic and communication equipment at 95.2, and general and precision machinery and equipment at 95.5.

The index for the electronic and communication equipment industry, which includes semiconductors, rose 23 points compared with a month earlier, but still remained below 100, continuing a negative outlook for nine consecutive months.

Among non-manufacturing industries, only one industry saw a figure above 100: the electricity, gas and water at 105.9. That industry had some favorable factors, as rate hikes were expected for electricity and gas. The weakest outlook was seen in the information & communication industry, at 82.4.

By sector, negative outlooks were prevalent across all sectors, with 89.1 for finance, 90.9 for profitability, 92.7 for domestic demand, 93.2 for investment, 93.9 for exports, 97.0 for employment, and 104.1 for inventories. An inventory index above 100 indicates a negative outlook, as it indicates excess inventory.

The BSI for the second quarter this year was weak at 92.6.

Based on the average BSI for the second quarter of each year, this year’s second quarter figure is the second lowest since the figure stood at 64.3 in the second quarter of 1998, after the Asian Financial Crisis, following 63.3 in the second quarter of 2020, at the beginning of the COVID pandemic.

By Pulse

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