Further Improvement In Business Sentiment, But Detail Less Upbeat

Earlier today South Korean manufacturing and non-manufacturing sentiment improved further in terms of May readings. Manufacturing edged up to 72 in terms of the headline (from 69). Non-manufacturing is at 76 versus 75 prior.

• For manufacturing, this is only back to levels from late 2022, but is trending in the right direction. The first chart below overlays this headline index against y/y GDP growth. Much like yesterday's improved consumer sentiment result, today's reading is suggesting better y/y GDP momentum in the quarters ahead.
• The seasonally adjusted series for manufacturing showed less improvement though, albeit ticking higher to 68.

Fig 1: Manufacturing Sentiment Versus Y/Y GDP

Source: MNI - Market News/Bloomberg/BoK

• The non-manufacturing reading is also back to late 2022 levels, but in an absolute sense remains at higher levels relative to manufacturing. The seasonally adjusted reading nudged down though, printing at 73.
• In terms of the detail, on the manufacturing side, there was a decent pick up in sales expectations and new orders, although this looked more orientated towards the domestic side of the economy.
• Export expectations only improved a touch, and isn't suggesting a sharp rebound in export growth, see the second chart below.

Fig 2: Manufacturers Export Expectations Versus Exports Y/Y

Source: MNI - Market News/Bloomberg/BoK