Manufacturing Sentiment Hits 7-Month High

South Korean manufacturers' confidence for May rose to a seven-month high as a stabilizing currency and improving economic indicators fueled corporate optimism, the central bank said Thursday.

The business survey index (BSI) of manufacturers climbed from 60 in April to 71 for May, the highest since October last year, according to Yonhap News Agency.

A reading below 100 indicates pessimists outnumber optimists. The nationwide poll of 2,129 companies was conducted April 15-22.

"The sharp increase in consumer confidence came as companies expect a stabilizing local currency to help improve their profits by reducing import bills," Chang Young-jae, a BOK official, was quoted as saying. "The worst phase of manufacturers' sentiment seems to be over, but it still remains apart from being positive," Lee noted.

The companies' confidence for the current month also gained sharply. The BSI for manufacturers' sentiment jumped to 69 for April, compared with 57 the previous month.

The latest report is in line with a sharp rise in consumer sentiment, made public by the central bank on Monday. The measure of local households' sentiment rose to a nine-month high of 98 in April, up from 84 a month earlier.

The upbeat manufacturer data came as the South Korean economy narrowly averted slipping into the first economic recession in a decade, fueled by state pump-priming and a slowdown in export contraction. The economy expanded 0.1 percent in the January-March period from the previous three months, after posting a 5.1 percent contraction in the fourth quarter of 2008.

The key stock index KOSPI has gained 19 percent so far this year after plunging 40 percent last year due to the collapse of the U.S. investment bank Lehman Brothers.

The won climbed 17 percent against the U.S. dollar as of Wednesday since hitting a yearly low on March 2.