Corporate Business Sentiment Turns Positive for the First Time in Four Years, Driven by a Manufacturing Rebound

\r\n
According to The Financial News, business sentiment among Korean companies is clearly improving, supported by a recovery in exports and expectations of a rebound in manufacturing. The Business Survey Index (BSI) has moved above the baseline for the first time in about four years, signaling that corporate sentiment has turned positive and raising hopes for a broader recovery led by the manufacturing sector.
On the 24th, the Federation of Korean Industries (FKI) announced that the March outlook reading of the Business Survey Index (BSI), based on a survey of the 600 largest companies by sales, came in at 102.7. This is the first time since March 2022, when it stood at 102.1, that the overall BSI has exceeded the baseline of 100, a gap of about four years. A BSI reading above 100 means more companies view the outlook as improving compared with the previous month.
The latest rebound was led by manufacturing. The March manufacturing BSI outlook rose 17.8 points from the previous month to 105.9, entering positive territory for the first time in two years. This is the highest level in about four years and ten months, since May 2021. In contrast, the non-manufacturing outlook stood at 99.4, slightly below the baseline.
Notably, nine out of ten detailed manufacturing sectors posted readings above 100. The general and precision machinery and equipment sector recorded the highest outlook at 128.6. The textiles, apparel, leather, and footwear sector also jumped to 114.3, up 41.0 points from the previous month, reflecting expectations of stronger consumption demand for the new school term.
In non-manufacturing, wholesale and retail (111.8) and leisure, accommodation, and food services (108.3) showed positive outlooks. However, some sectors, such as electricity, gas, and water supply (78.9), are expected to remain sluggish.
By component, the export outlook reached 100, the highest level in one year and nine months. In contrast, domestic demand (98.5) and investment (96.4) remained below the baseline, leading some analysts to caution that the improvement in business sentiment cannot yet be seen as broadly based.
FKI explained that improved performance in key export items and base effects from fewer working days in February this year helped lift sentiment. With outlooks improving in most areas except inventories and funding conditions, FKI assessed that business sentiment has entered a rebound phase.
Lee Sang-ho, head of the Economic Headquarters at FKI, said, "It is a meaningful change that corporate sentiment, which had been dampened by the economic downturn, is now improving," adding, "To ensure this rebound does not remain a temporary effect, we need to strengthen the institutional foundation for boosting corporate vitality, including regulatory reforms."
The survey was conducted from the 4th to the 11th of this month on the 600 largest companies by sales, excluding financial firms. A total of 339 companies responded, resulting in a response rate of 56.5%.
moving@fnnews.com Lee Dong-hyuk Reporter