Due to Strong Automobile and Shipbuilding Exports... Business Sentiment Rises for 3 Consecutive Months

May All-Industry Business Survey Index Improves for 3 Consecutive Months
Export Improvement Effects in Key Industries like Automobile and Shipbuilding
Consumption Also Briefly Improves in Family Month

Exports of major industries such as automobiles and shipbuilding improved, and consumption also partially recovered, leading the business sentiment index to rise for three consecutive months. Both manufacturing and non-manufacturing companies showed improved sentiment, pushing the index to its highest level in eight months.

According to the 'May Business Survey Index (BSI) and Economic Sentiment Index (ESI)' released by the Bank of Korea on the 22nd, the overall industry business condition BSI for this month rose by 2 points from the previous month to 73.

This is the highest level in eight months since recording 73 in September last year. The overall industry business condition BSI fell to 68 in February, then rose to 69 in March, 71 in April, and increased again this month, marking a three-month consecutive rise. It is the first time in 3 years and 7 months since October 2020 that the overall industry business condition BSI has risen for three consecutive months.

The BSI is an index created by surveying businesspeople's judgments and outlooks on the current business management situation; if negative responses outnumber positive ones, the index falls below 100. The long-term average of the overall industry business condition BSI from 2003 to 2023 over 20 years is 77. It has not yet reached the long-term average.

Export containers are being loaded onto a ship at Busan North Port. Photo by Jinhyung Kang aymsdream@

Favorable Indicators Due to Improvement in Automobile and Shipbuilding Industries

Both manufacturing and non-manufacturing sectors showed improved indicators. The manufacturing business condition BSI in May rose by 1 point from the previous month to 74, while the non-manufacturing sector increased by 3 points to 72.

Looking at the manufacturing business condition BSI by industry, the automobile sector led the rise with a 10-point increase from the previous month. Other machinery and equipment rose by 8 points, and metal processing increased by 5 points.

Hwang Hee-jin, head of the Statistics Survey Team at the Bank of Korea's Economic Statistics Department, explained, "The overall business sentiment in the automobile sector was good due to increased demand for parts following continued strong automobile exports," adding, "The boom in the upstream shipbuilding industry also increased demand for related machinery and equipment, which influenced the improvement in the manufacturing business condition BSI." He further noted, "In the case of metal processing, the progress rate of construction projects in spring improved, leading to an expansion in the delivery of pre-contracted construction materials."

By company size in manufacturing, large enterprises (+3 points), small and medium enterprises (+1 point), export companies (+1 point), and domestic companies (+2 points) all showed generally positive sentiment.

In the non-manufacturing sector, wholesale and retail trade and transportation and warehousing rose by 8 points and 7 points respectively from the previous month, lifting the non-manufacturing business condition BSI. Team leader Hwang said, "Wholesale and retail trade improved due to increased demand for consumer goods at department stores and outdoor goods stores during Family Month," and "Transportation and warehousing benefited from increased domestic and international cargo volumes and a rise in travelers during the holiday period."

The business condition BSI outlook for next month was surveyed at 74, up 1 point from the previous month. Manufacturing rose 2 points to 76, and non-manufacturing increased 1 point to 72.

The May ESI, which reflects the Consumer Sentiment Index (CSI) in the BSI, fell by 0.7 points from the previous month to 93.8. The seasonally adjusted ESI cyclical component was 92.0, down 0.2 points from the previous month.

This survey was conducted from the 7th to the 14th of this month targeting 3,524 corporate entities nationwide. The number of respondents was 3,269, with a response rate of 92.8%.