Business Sentiment Eases, But Export Outlook Ticks Higher

Earlier data showed South Korean business sentiment moderating in terms of the headline results. The BoK survey showed manufacturing sentiment for July edged down to 75 from 76. This leaves us close to levels seen so far in 2024. We are above average levels from 2023, but off well earlier cyclical highs (near 100 back in 2021).

• In terms of the detail on the manufacturing side, we saw sentiment for large manufacturers ease to 84 from 86, while SME sentiment was steady, albeit at a lower outright level (66).
• Domestic conditions were slightly weaker, although the export and production forecasts firmed. The chart below overlays Manufacturing export expectations against South Korean y/y export growth.
• Note we get the full month of June export figures next Monday. The 20-day data has showed some moderation in terms of the export pace, compared to earlier trends in 2024
• The profit sub index continued to rise, up to 82 from 81, although we are still comfortably below highs from earlier years.
• On the non-manufacturing side, the headline index fell to 70, although it remains above earlier 2024 lows. Underlying details were mixed, but didn't shift much versus June levels.

Fig 1: South Korean Manufacturers' Export Expectations Versus Export Growth Y/Y