SEOUL, January 27 (AJP) -South Korea’s large manufacturers — most of them export-oriented — turned optimistic about business conditions on strong orders in semiconductors and shipbuilding, even as overall business sentiment softened at the start of 2026, a Bank of Korea survey showed Tuesday.
The business sentiment index for large manufacturing firms rose to 101.8 in January, up from 97.7 a month earlier, marking the first time the reading topped the neutral 100 threshold in three years and seven months, according to the central bank’s January business survey and economic sentiment index.
A reading above 100 signals optimism, while a figure below that level indicates pessimism.
The rebound was led by shipbuilders, whose business conditions index climbed to 107, reflecting strong order books, while sentiment among electronic equipment makers stood at 97, supported by robust semiconductor exports.
By contrast, sentiment among small manufacturers remained subdued. Their index rose 1.7 points month on month but stayed at 91.8, underscoring a widening confidence gap between large and small firms. The gap between the two expanded to 10.0 points, the widest since September 2023.
“Sentiment improved among large firms led by primary metals, other machinery and equipment, and electronic, video and communications equipment,” said Lee Hye-young, head of the Bank of Korea’s economic sentiment survey team.
Industry-level data showed sharp divergence. In terms of current business conditions, shipbuilding and other transportation equipment posted a reading of 112, the only manufacturing sector above 100, buoyed by expectations of increased exports linked to cooperation with the United States. Electronic, video and communications equipment recorded a relatively high reading of 87, reflecting sustained semiconductor demand.
Across all industries, however, the composite business sentiment index edged down 0.2 points to 94.0, slipping after three consecutive monthly gains.
Manufacturing and nonmanufacturing sectors moved in opposite directions. The manufacturing CBSI rose 2.8 points to 97.5, supported by improvements in production and new orders. The nonmanufacturing CBSI fell 2.1 points to 91.7, weighed down by weaker funding conditions and profitability.
Looking ahead, the outlook index for February improved modestly, rising to 95.0 for manufacturing and 88.4 for nonmanufacturing, while the all-industry outlook stood at 91.0.
Lee said sentiment in nonmanufacturing sectors often peaks at year-end due to seasonal order concentration, with a slowdown typically emerging early in the year. She added that signs of improvement are emerging for February, led by wholesale and retail trade and arts, sports and leisure-related services, reflecting the Lunar New Year holiday effect.
The economic sentiment index, which combines corporate and consumer sentiment, rose 0.5 points to 94.0 in January, while the seasonally adjusted cyclical indicator increased 0.6 points to 95.8.
The survey was conducted between Jan. 12 and 19 among 3,524 companies nationwide, with 3,255 firms responding, including 1,815 manufacturers and 1,440 nonmanufacturers.
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