Business Sentiment Improves, But Large Manufacturers Outperforming

Earlier BOK business survey data for June painted a resilient picture across manufacturing and non-manufacturing sentiment. The manufacturing index rose to 76 from 74 in May, this is highs back to Q3 2022. The non-manufacturing index firmed to 72 from 71, levels seen in Q4 last year.

• The rate of ascent in these survey measures is fairly modest, particularly compared to the 2020 cycle. Still, up moves are likely to be welcomed by the authorities and it helps offset some of the recent downshift in headline consumer sentiment readings from a broader economic standpoint.
• In terms of the detail, on the manufacturing side, larger firms saw a spike in conditions to 86 from 81. SMEs actually saw a small fall. This probably points to the more externally focused firms doing better relative to those more domestically focused.
• This is reinforced by the domestic conditions at 73 from 72 prior, while the export outlook rose to 83 from 80. The chart below plots this export forecast against Souht Korean export growth in y/y terms.
• On the non-manufacturing side, we saw steadier outcomes in terms of sub-components, which is again consistent with these types of firms being more domestically focused.

Fig 1: South Korea Exports Y/Y & Manufacturing Export Outlook

Source: MNI - Market News/Bloomberg