In September, South Korea's Composite Business Sentiment Index (CBSI) experienced a downturn for the third consecutive month, settling at 91.2. This marks a decline of 1.3 points from August, as reported by the Bank of Korea on Friday. A reading below 100 signifies prevailing pessimism compared to historical averages, raising concerns about the overall business climate in the country.
The outlook for October also saw a slight decrease of 0.1 points, dropping to 92.6, which indicates a cautious mood prevailing among businesses. In the manufacturing sector, the CBSI fell to 90.9, representing a notable decrease of 1.9 points. However, there were signs of resilience among manufacturers, with the outlook for October improving by 0.3 points, reaching 94.0.
This suggests a glimmer of cautious optimism within an otherwise challenging environment. The analysts from ING Research noted, "Sentiment in the manufacturing sector improved but was more than offset by the decline in the non-manufacturing sector," highlighting the uneven recovery across different industries. On the other hand, the non-manufacturing sector posted a CBSI of 91.4, decreasing by 0.8 points, and its outlook also dipped by 0.5 points to 91.5.
This further illustrates the challenges faced by service-oriented businesses in the current economic landscape. ING analysts indicated that "financial conditions declined the most, indicating that firms are suffering from tight monetary conditions and sluggish demand," pointing to significant hurdles in maintaining financial health. The Economic Sentiment Index (ESI), which combines business and consumer sentiments, stood at 93.7, reflecting a decrease of 0.5 points from August.
This composite index provides valuable insight into the broader economic perceptions among both businesses and consumers. The survey, conducted between September 4 and September 11, included 3,524 companies, receiving 3,280 responses. It covered various factors, such as business conditions, sales performance, and profitability metrics, essential for assessing economic health.
The analysts concluded, "Taken together with yesterday's softening of consumer sentiment data, the overall survey data point to a cloudy outlook, particularly for domestic growth," underscoring the mixed signals in the economy as South Korea faces potential headwinds in its growth trajectory..