SEOUL — South Korea’s corporate sentiment jumped to its highest level in nearly three and a half years in May, fueled by robust exports and easing disruptions in the raw materials supply chain. The sharp rebound offers a strong signal that the economic recovery is broadening from heavy manufacturing into domestic service sectors.
According to data released by the Bank of Korea (BOK) on May 27, the Composite Business Sentiment Index (CBSI) for all industries stood at 98.9 for May, up 4.0 points from the previous month. This marks the highest reading since October 2022 (99.0) and represents the largest single-month gain since May 2023 (+4.4 points).
The CBSI is a comprehensive gauge derived from the Business Survey Index (BSI), reflecting the economic outlook of corporate executives across nine major categories (five in manufacturing and four in non-manufacturing). A reading below 100 indicates that pessimistic views outnumber optimistic ones relative to the long-term average (2003–2025), but the rapid climb toward the 100-threshold signals a dramatic shift in corporate psychology.
Manufacturing Breaks Above 100-Threshold
The manufacturing sector led the charge, with its CBSI climbing 1.7 points to 100.8. This marks the first time the manufacturing index has breached the baseline of 100 since August 2022 (102.9), meaning that manufacturers, on average, now view economic conditions as favorable.
The boost was primarily driven by improvements in overall business conditions (+1.4 points) and better liquidity/financial situations (+1.3 points). Looking at specific sectors:
Electrical Equipment & Semiconductors: Benefited from sustained global demand for AI infrastructure and tech hardware.
Electronic, Video, and Communication Equipment: Showed strong export performance.
Machinery & Equipment: Rebounded due to increased capital expenditure overseas.
"Manufacturers are now generally more optimistic about the economy than the long-term average," said Lee Heung-woo, head of the BOK’s Economic Sentiment Survey Team. "The sustained momentum in electronic and tech exports is creating a positive spillover effect."
Non-Manufacturing Sectors Rebound on Supply Chain Relief
The non-manufacturing sector experienced an even sharper monthly jump. Its CBSI surged by 5.4 points to 97.5, registering its largest gain since May 2023 (+5.9 points). Profitability (+1.9 points) and core business conditions (+1.4 points) served as the primary growth engines.
BOK officials attributed this domestic recovery to supply chain diversification, which has effectively mitigated previous bottlenecks in raw material imports. As goods began flowing smoothly again, logistics and domestic trade picked up traction.
Furthermore, seasonal factors provided a significant tailwind. A cluster of holidays early in the month, coupled with unseasonably warm weather, triggered a release of pent-up demand in consumer-facing industries. Notable gains were recorded in:
Transportation & Warehousing: Driven by an increase in total freight volume and cargo movement.
Wholesale & Retail Trade: Boosted by increased consumer spending during the May holidays.
Arts, Sports, and Leisure Services: Benefited from outdoor activities and high holiday foot traffic.
Broader Economic Optimism on the Horizon
The optimism is expected to carry into the summer. The CBSI outlook for June rose across the board, with the comprehensive outlook index climbing 3.7 points to 97.6. The manufacturing outlook rose to 100.3, while the non-manufacturing outlook gained 4.7 points to reach 95.9.
Reflecting this widespread corporate optimism alongside consumer views, the Economic Sentiment Index (ESI)—which combines the BSI with the Consumer Survey Index (CSI)—surged by 5.8 points to 97.5. This represents the sharpest improvement in the ESI since January 2021 (+7.2 points), immediately following the initial COVID-19 vaccine rollouts. However, the cyclically adjusted ESI, which filters out seasonal irregularities, remained flat from the previous month at 95.2, suggesting that while sentiment has spiked rapidly, structural long-term growth is adjusting at a steadier pace.
The BOK’s May survey was conducted between May 11 and 18, covering 3,524 companies nationwide, with responses collected from 3,201 firms (1,791 manufacturers and 1,410 non-manufacturers).
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