"September Manufacturing Recovers from 'Corona Resurgence' More than August... Slows Down in October"

September Semiconductor and Home Appliance PSI Below 100...Worsened from August
October ICT Outlook Hits Lowest in 5 Months
October Semiconductor Outlook Plummets Reflecting 'Huawei Risk'

Image source=EPA Yonhap News

[Asia Economy Reporter Moon Chaeseok] This month’s manufacturing business conditions have improved compared to last month, when the novel coronavirus (COVID-19) resurged after the August 15 Liberation Day.

Next month, conditions are expected to worsen across domestic demand, exports, and production compared to this month. In particular, the semiconductor outlook for next month plummeted due to the suspension of Huawei supplies, which amount to an annual scale of 10 trillion won.

◆ September Figures Rise 1 Point from August... Semiconductors and Home Appliances Remain Weak

On the 27th, the Korea Institute for Industrial Economics and Trade announced that this month’s manufacturing 'Professional Survey Index' (PSI) recorded 118, rising 1 point from 117 in August.

The survey was conducted from the 14th to the 18th with 176 experts commissioned by FnGuide and Metrics. The index is measured on a scale from 0 to 200, where a value closer to 200 indicates an increase (improvement) compared to the previous month, and a value near 0 indicates a decrease (deterioration). A score of 100 means no change from the previous month.

This month’s PSI stood at 118, up 1 point from August. It has remained above 100 for four consecutive months. Domestic demand was 117, rising 7 points from the previous month. Exports reached 122, up 8 points from August. Production was 116, increasing 8 points month-over-month. Investment amounted to 88, falling below 100.

Source: Korea Institute for Industrial Economics and Trade

By sector, Information and Communication Technology (ICT) scored 125 and materials 122, rising 3 points and 2 points respectively from the previous month, while equipment fell 1 point to 109 compared to August.

However, looking closely by industry, semiconductors scored 88, home appliances 92, and textiles 86, all showing weak performance. Among these, home appliances fell below 100 for the first time in 4 months, and textiles for the first time in 3 months.

Displays recorded the highest score at 157 but dropped 10 points from August. Steel scored 153, mobile phones 147, and chemicals 133, showing strong performance, while shipbuilding surpassed 100 at 104 for the first time in 3 months.

◆ 'Huawei Risk' Reflected in Sharp Drop in Semiconductor Outlook for October

Source: Korea Institute for Industrial Economics and Trade

Next month, performance is expected to worsen compared to this month, with weakening expectations for improvements in high value-added industries such as ICT.

The ICT outlook for next month is 112, the lowest since May’s 114. Equipment outlook fell 1 point to 112, and materials dropped 2 points to 118.

The semiconductor outlook plunged 29 points from the previous month to 52. Displays fell 23 points to 148, and home appliances dropped 16 points to 92.

Automobiles and shipbuilding maintained the same outlook as the previous month at 126 and 104, respectively. Meanwhile, textiles (114), mobile phones (147), and electronics (130) showed slight increases compared to the previous month.