Business Sentiment Falls for 3 Consecutive Months
By Yoon Ja-young
Staff Reporter
Business sentiment among manufacturers had fallen for three consecutive months, pressured by oil price hikes. The forward-looking business sentiment for March, however, has turned more positive, reflecting their expectations for the new pro-business government.
According to the Bank of Korea, the business sentiment index of manufacturers for February stood at 82, down one point from the previous month. The sentiment index fell for three consecutive months after recording 88 in November last year.
Figures over 100 mean there are more businesses that think positively about their corporate performances than those with negative views, while readings below 100 mean that pessimists outnumber optimists over the economic outlook. The index was compiled on the basis of a survey of 2,151 companies nationwide.
The index showed polarization between conglomerates and small- and medium-sized enterprises. While big corporations had the index rise to 93 from 91, small corporations had it fall to 76 from 78. Economists have pointed out that the fruit of Korea's remarkable economic growth and record-high export was not evenly distributed among exporting conglomerates and small firms targeting the domestic market.
The central bank explained that rising prices of oil and raw materials, which Korea depend on as imports, seems to have dragged down the business sentiment. One out of three manufacturers chose raw materials price hikes as the biggest burden, followed by the sluggish domestic market and fierce competition.
The business outlook for March, however, soared 6 points from the previous month to 90. The index for large corporations rose 7 points to 97, and small- and medium-sized firms had it up 5 points to 86. ``The business performance generally improves in March. The rise seems to reflect the expectation,'' the central bank said. Demand generally goes up in the market in spring as school starts and more families move homes.
The expectation on the new, pro-business government also appears to have improved the business sentiment, though the index still falls short of the 100 mark.
Another survey by the Federation of Korea Industries, a chaebol mouthpiece, showed even better business sentiment. The survey on 600 big corporations in the country had the business outlook index at 102.1 for March, hovering above the 100 mark. ``The expectations on the new government and improving profit for exporters following the strengthening of the dollar seem to be reflected in the index,'' it explained.