"Definite Change," Really?..."Manufacturing Stalls Again in Q1"

Industrial Research Institute 'Manufacturing Business Survey Index (BSI) Q4 Status and Q1 Outlook'

Recovery in Q4 compared to sluggish Q3 last year

Survey conducted before Korea-China-Japan summit and US-China first trade talks... Outlook may decline

"This year, hope should be placed on secondary batteries, bio-health, and semiconductors"

'Definite Change', Can It Be Achieved?/Photo by Jang Jin-hyeong aymsdream@

[Asia Economy Reporter Moon Chaeseok] The manufacturing sector, the backbone of our economy, showed a brief recovery in the fourth quarter but is expected to deteriorate again in the first quarter. Since the survey was conducted before the Korea-China-Japan summit and the first US-China trade agreement, the manufacturing outlook may worsen further.

On the 27th, the Korea Institute for Industrial Economics and Trade announced that it surveyed 1,135 domestic manufacturers from December 9 to 20 last year on the Business Survey Index (BSI), and both the business condition outlook and sales outlook for the first quarter (January to March) were recorded at 86.

These values are 1 point and 2 points lower than the previous quarter, respectively, and both indices fell below 100. A BSI above 100 indicates a prevailing expectation that the economy will improve compared to the previous quarter, while a BSI below 100 indicates a prevailing expectation that it will worsen.

The domestic demand and export outlooks also remained at 86 and 94, respectively, each dropping by 2 points from the previous quarter. Facility investment and inventory barely recorded 100, while employment (98), operating profit (87), and financial conditions (85) all fell below 100.

The overall BSI outlook for this year is not high either. Business conditions and sales are only 90 and 94, respectively. Facility investment (101) and employment (100) will just barely stay above 100, but domestic demand (92), exports (97), inventory (99), operating profit (93), and financial conditions (90) are expected to remain below 100.

By industry, all 12 sectors except bio-health (107) had BSI outlooks below 100 for the first quarter.

Display (75), wireless communication devices (80), and textiles (80) were low, and semiconductors (89), automobiles (90), refining (82), chemicals (93), and secondary batteries (96) also fell below 100.

Looking at the entire year, secondary batteries (115), bio-health (106), semiconductors (103), and refining (100) are expected to exceed 100.

The current indicators for the fourth quarter of last year rose compared to the third quarter. Business conditions and sales recorded 84 and 85, respectively, improving from the weak third quarter figures of 78 for both.

Since this survey was conducted before the Korea-China-Japan summit and the first US-China trade agreement, the manufacturing sector’s economic outlook may worsen further.