Seoul, South Korea – South Korea's manufacturing sentiment has hit a 13-month low in November, largely due to uncertainties following the US presidential election and concerns over a slowdown in exports.
The Bank of Korea's Business Survey Index (BSI) for manufacturing declined by 2.0 points to 90.6 in November, the lowest level since October 2023. The sub-indexes for inventory and financing conditions also decreased.
The decline was attributed to various factors, including weakening demand for semiconductors and mobile phone components, disruptions in the automotive industry caused by parts shortages and strikes, and concerns over potential trade policy changes under the new US administration.
In contrast, the non-manufacturing BSI rose by 0.4 points to 92.1, driven by improvements in profitability and sales. However, the overall composite BSI, which includes both manufacturing and non-manufacturing sectors, declined by 0.6 points to 91.5.
The Bank of Korea's survey, conducted among 3,326 companies from November 12th to 19th, highlighted the challenges faced by South Korean businesses. The decline in manufacturing sentiment is particularly concerning, as exports have been a key driver of the South Korean economy.
Key findings from the survey include:
Electronics and telecommunications: The sub-index for financing conditions declined by 11 points, reflecting concerns over weakening demand for mobile phone components.
Automobiles: The sub-indexes for financing conditions and production declined by 9 points and 10 points, respectively, due to parts shortages and strikes.
Chemicals: The sub-indexes for financing conditions and business conditions declined by 6 points each, reflecting weakening domestic and overseas demand and intensifying competition from Chinese companies.
While the non-manufacturing sector showed some improvement, particularly in transportation, storage, and real estate, the overall outlook for the South Korean economy remains uncertain. The Bank of Korea will be closely monitoring developments in the global economy and domestic policy to assess the potential impact on economic growth.
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