South Korea Business Sentiment Index drops

EditorialRoom 27th January 2022

South Korea’s Business Survey Index (BSI) on manufacturing business conditions was 90 in January, down 5 points from the previous month,  the Bank of Korea said on Thursday (Jan. 27).

The outlook for the following month also fell by 2 points to 90. A reading below 100 means pessimists outnumber optimists. The fall is attributed to the prospect for sluggish demand in the electronic, video, communication equipment and metal processing sectors.

The Business Survey Index (BSI) is compiled to grasp the business conditions for the current month and their outlook for the month following, by conducting surveys on entrepreneurs’ perceptions of them. A total of 15 items, including business conditions, sales and profitability, are surveyed at 3,255 corporations.

In the non-manufacturing sector, the BSI on business conditions for January 2022 was 83, up 1 point from the previous month, and the outlook for the following month also rose by 4 points to 82 amid expectations demand will grow for software development.

The Economic Sentiment Index (ESI) for January was 105.6, up 1.1 points from December 2021.

The Economic Sentiment Index (ESI), a composite of the BSI (business survey index) and the CSI (consumer survey index), is compiled to comprehensively grasp the private sector perception of economic conditions, including the sentiments of both businesses and consumers.

An ESI reading above 100 is interpreted as meaning that economic sentiment in the private sector, including that of both businesses and consumers, is on a level better than past averages (and vice versa when the reading is below 100), since the ESI is constructed so that it is distributed around a long-term mean of 100 and a standard deviation of 10.

Meanwhile, consumer confidence in the Asian country improved in January, the Bank of Korea said on Wednesday with a Composite Consumer Sentiment Index score of 104.4 – up from 103.8 in December.

Consumer sentiment for current living standards and their future outlook were unchanged at 91 and 96, respectively. Consumer sentiment for future household income was also unchanged at 100, while the outlook was one point higher than in the previous month at 111.