Corporate Sentiment Revives After Four Years... Manufacturing Outlook Turns "Bright"

KAB's March BSI Outlook at 102.7
Manufacturing Up 17.8 Points from Previous Month
Non-Manufacturing Below Baseline for Third Consecutive Month

Thanks to strong exports of key items such as semiconductors and automobiles, corporate business sentiment has improved for the first time in four years.

The Korea Association of Businesspeople (KAB) announced on the 24th that, based on a Business Survey Index (BSI) survey of the top 600 companies by sales, the March BSI outlook came in at 102.7. This is the first time in four years that the BSI outlook has exceeded the baseline level of 100 since March 2022, when it recorded 102.1.

Trend of the Composite Business Survey Index (BSI). Korea Business Association

The BSI is an index that quantifies the overall business conditions as perceived by companies. A reading above the baseline of 100 indicates that the business outlook is better than in the previous month, while a reading below 100 means that pessimistic views of business conditions prevail.

Conditions differed by industry. The manufacturing BSI (105.9) rose by 17.8 points from the previous month (88.1), surpassing the baseline 100 for the first time in two years since March 2024 (100.5). In contrast, the non-manufacturing BSI (99.4) remained slightly below the baseline 100 for the third consecutive month, indicating a negative outlook.

Among the 10 detailed manufacturing sectors, 9 recorded readings at or above the baseline 100, and the only sector showing a negative outlook was food, beverages, and tobacco (94.7).

The Korea Association of Businesspeople analyzed that improved export performance of major items in the new year, as well as a base effect stemming from fewer working days in February, drove the recovery in corporate sentiment.

Among the 7 detailed non-manufacturing sectors, driven by a modest recovery in domestic demand, wholesale and retail (111.8), and leisure, accommodation, and dining (108.3) showed positive outlooks. Excluding construction, which was at the baseline, four sectors including electricity, gas, and water supply (78.9) are expected to experience sluggish business conditions.

By segment, exports (100) hit the baseline, marking the highest level in 1 year and 9 months since June 2024 (101.0). In contrast, the remaining six segments, including major areas such as domestic demand (98.5) and investment (96.4), showed negative outlooks.

The Korea Association of Businesspeople noted that, although the segment-wise BSI remains below the baseline and still reflects a negative outlook, business sentiment appears to be rebounding, as the outlook indices for all segments except inventory and financial conditions rose compared with the previous month.

Lee Sangho, Head of the Economic Division at the Korea Association of Businesspeople, said, "It is a very meaningful change that corporate sentiment, which had been sluggish for a long time due to the ongoing economic downturn, has improved," adding, "To ensure that this improvement in corporate sentiment does not remain a short-term rebound, the National Assembly and the government must build up the institutional foundation to boost corporate vitality, such as improving regulations, so as to sustain the momentum for recovery in economic sentiment."