There is a view that manufacturing conditions in the second quarter will worsen from the first quarter. The outlook reflects expectations that sales in the refining and chemical sectors will decline due to the fallout from the Middle East war.
On the 19th, the Korea Institute for Industrial Economics & Trade (KIET) said that a business survey index (BSI) of 1,500 domestic manufacturers conducted from the 9th to the 20th of last month found the second-quarter outlook BSI at 90. With 100 as the baseline, the closer the BSI is to 200, the more respondents expect conditions to improve from the previous quarter. Conversely, the closer it is to 0, the more respondents expect conditions to deteriorate from the previous quarter. The BSI rose from 89 in the fourth quarter of last year to 91 in the first quarter of this year. But it fell back to 90 for the second quarter.
The export index also fell from 95 in the first quarter to 92 in the second quarter. Operating profit likewise declined from 91 to 90 over the same period. However, facility investment improved (96→98).
By industry, the second-quarter sales outlook BSI was 103 for semiconductors and 102 for shipbuilding. Refining (78), home appliances (84), displays (86), steel (88), chemicals (91), wireless communication devices (92), general machinery (94), and biohealth (94) were all below 100.
The first-quarter manufacturing sales conditions BSI is 79. That is a drop of 7 points from the previous quarter (86). Most sectors were sluggish, including wireless communication devices (80), refining (73), home appliances (67), steel (67), and textiles (65).
Manufacturers cited "external condition uncertainty" (53%, multiple responses) as the factor currently having the greatest impact on management activities. In the previous survey, 24% of manufacturers cited external condition uncertainty, but the share increased in this survey. Difficulties stemming from the prolonged Middle East war included "heavier burden of materials and supplies costs" (73.2%), "higher ocean freight rates" (31.6%), and "decrease in orders" (33.1%).