Corporate sentiment rebounded to the highest level in 1 year and 5 months. Year-end seasonal demand mainly lifted nonmanufacturing, centered on wholesale and retail and services. Manufacturing also improved as facilities investment increased, led by metal processing and other machinery and equipment.
According to the "December corporate business survey results and Economic Sentiment Index (ESI)" released by the Bank of Korea on the 26th, this month's Composite Business Survey Index (CBSI) for all industries rose 1.6 points (p) from the previous month to 93.7. It is the record high since July last year (95.5).
The CBSI is a sentiment indicator calculated using key indexes in the Business Survey Index (BSI) (five for manufacturing and four for nonmanufacturing). Using the long-term average (January 2003–December 2024) as the baseline, a reading above 100 means more optimistic than the long-term average, and below 100 means more pessimistic.
By industry, sentiment improved for both manufacturing and nonmanufacturing corporations. The manufacturing CBSI came in at 94.4, up 1.7 p from the previous month. Funding conditions (+0.9 p) and production (+0.4 p) were the main drivers. The nonmanufacturing CBSI rose 1.4 p to 93.2. Improvements in sales (+0.6 p) and funding conditions (+0.5 p) were the main reasons.
The outlook for the CBSI in January was found at 89.4, down 1.7 p from the previous month. Manufacturing was projected at 93.6, up 1.9 p from the previous month, and nonmanufacturing at 86.6, down 4.1 p. In manufacturing, the product inventory outlook improved by 1.3 p, while in nonmanufacturing, the profitability outlook worsened by 2.3 p.
Lee Hye-young, head of the Economic Sentiment Survey Team in Economic Statistics Department 1, said, "In manufacturing, sentiment improved mainly in sectors related to U.S. facilities investment, and in nonmanufacturing, corporate sentiment improved as year-end consumption increased (centered on wholesale and retail and services)." Lee added, "Next year, the year-end seasonal effect disappears, so the business outlook for nonmanufacturing has worsened."
The Economic Sentiment Index (ESI) for November, a composite of the Business Survey Index (BSI) and the Consumer Survey Index (CSI), was 93.1, down 1 p from the previous month. The cyclical component, derived by removing seasonal and irregular fluctuations from the original ESI series, was 94.9, up 0.7 p from the previous month.