Sluggish Domestic Demand and Exports... Gwangju and Jeonnam Companies Feel Economic Chill

CBSI Falls to 81
Financial Conditions and New Orders Drive Decline

Companies in the Gwangju and Jeonnam regions reported a further decline in business sentiment compared to the previous month, due to uncertain economic conditions and sluggish domestic demand.

According to the Gwangju-Jeonnam branch of the Bank of Korea on the 3rd, a business sentiment survey was conducted from the 13th to the 21st of last month on 525 local companies (249 manufacturing and 276 non-manufacturing). The Composite Business Sentiment Index (CBSI) for manufacturing was 81.0, down 6.9 points from the previous month. This is 9 points lower than the nationwide manufacturing CBSI (89.0), which rose by 1.9 points.

The CBSI for the region's non-manufacturing sector also fell by 7.9 points from the previous month to 81.9. The nationwide non-manufacturing CBSI dropped by 3.9 points to 83.6 compared to the previous month.

The outlook CBSI for the next month in manufacturing rose by 1.1 points to 85.0, while non-manufacturing declined by 0.7 points to 80.1.

The CBSI (Composite Business Sentiment Index) is a psychological indicator calculated using key indices such as business conditions, production, and financial conditions from the Business Survey Index (BSI). The long-term average (January 2003 to December 2024) is set as the baseline (100); a value above 100 indicates optimism compared to the long-term average, while a value below 100 indicates pessimism.

For manufacturing, factors such as financial conditions (contribution -2.9 points) and new orders (contribution -2.0 points) contributed to the decline.

By sector, the production and sales BSI were 73 and 71, down 3 and 1 points respectively from the previous month. The new orders BSI also fell by 9 points from the previous month to 63.

In Gwangju and Jeonnam, the business conditions BSI for non-manufacturing last month was 58, down 5 points from the previous month, and the sales BSI was 60, down 9 points.

For both manufacturing and non-manufacturing, major management difficulties included uncertain economic conditions, sluggish domestic demand, weak exports, labor shortages, and rising labor costs.

In manufacturing, the proportion citing uncertain economic conditions increased by 3.5 percentage points from the previous month, while the proportion citing labor shortages and rising labor costs decreased by 1.6 percentage points.

In non-manufacturing, the proportion citing seasonal factors such as the off-season increased by 1.1 percentage points from the previous month, while the proportion citing lack of funds decreased by 3.0 percentage points.