Business sentiment among companies has turned negative, with a decline in the construction sector and a slow recovery in domestic demand leading to a drop in the overall business sentiment index (CBSI). According to the Bank of Korea's "June Business Survey and Economic Sentiment Index (ESI)" released on June 25, the CBSI fell to 97.7 this month, a decrease of 1.2 points from the previous month, marking the largest drop since January 2022.
The CBSI is a sentiment indicator calculated using key metrics from the business conditions survey index (BSI). A score above the long-term average of 100 (2003-2024) indicates optimistic sentiment, while a score below 100 reflects pessimism.
The trends in manufacturing and non-manufacturing sectors diverged. The manufacturing CBSI rose by 0.4 points to 101.2, the highest level since August 2022 (102.9). Improvements in financial conditions and new orders contributed to this increase, with respective rises of 0.4 points and 0.2 points.
Conversely, the non-manufacturing CBSI dropped by 1.2 points to 97.7. Continued poor performance in the construction sector, along with a decline in sentiment in the arts, sports, and leisure services due to base effects from the previous month’s holiday, contributed to this downturn.
Lee Heung-hoo, head of the Bank of Korea's Economic Sentiment Survey Team, stated, "Manufacturing improved thanks to strong IT exports, while non-manufacturing declined due to the sluggish construction sector and base effects in the arts, sports, and leisure industries."
The outlook for future business conditions has also worsened. The projected CBSI for next month is 95.2, down 2.4 points from the previous month. The manufacturing outlook is at 98.2, a decrease of 2.1 points, while the non-manufacturing outlook is at 93.2, down 2.7 points.
The economic sentiment index (ESI) stands at 96.8, a decline of 0.7 points from the previous month. The seasonally adjusted value remains unchanged at 95.1 compared to the previous month.
* This article has been translated by AI.
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