South Korea’s corporate sentiment reached a four-year-and-two-month high in October, driven by robust activity in the semiconductor and automotive sectors, though concurrent data reveals starkly diverging fortunes for smaller enterprises.
Bank of Korea Records Four-Year High in Composite Business Sentiment
Business sentiment among domestic companies climbed sharply in October, registering the highest level since August 2022. According to survey results released by the Bank of Korea on Oct. 29, the composite business sentiment index (CBSI) for all industries rose 5.1 points from the previous month to hit 104.2. The increase marked the largest monthly jump in 5 1/2 years.
The CBSI measures overall corporate perceptions of economic conditions, with readings above the long-term average of 100 signaling an optimistic outlook. The index for all sectors surpassed the 100 threshold for the first time since September 2022. Manufacturing climbed 6.1 points to 105.6—its strongest showing since June 2022—while the non-manufacturing CBSI increased 4.3 points to 103.2, supported by improvements in sales and profitability.
Park Yong-min, head of the Economic Sentiment Survey Team at the Bank of Korea, stated that temporary headwinds from the Chuseok holidays and auto strikes had dissipated, allowing increased production and investment in key segments like semiconductors to lift upstream industries such as machinery. The central bank survey gathered responses from 3,450 businesses nationwide between Oct. 14 and 21.
Diverging Sentiments Highlight Strains for Small and Medium Enterprises
While large corporate indexes surged, alternative surveys underscore a contrasting reality for small and medium-sized enterprises (SMEs). The Korea Federation of SMEs reported that its Small Business Health Index (SBHI) for November fell 1.8 points from October to 81.5, based on a survey of 3,076 firms conducted between Oct. 14 and 20. Both manufacturing and non-manufacturing SME indexes declined, with more than half of respondents citing sluggish sales as their primary operational concern.
Furthermore, the Korea Businessmen’s Association announced on the 28th that its Business Survey Index (BSI) forecast for November among the top 600 companies by sales stood at 98.6, remaining in negative territory for the second consecutive month. Lee Sang-ho, head of the economic division at the association, pointed out that manufacturing outlooks remain sluggish despite domestic service sector gains, urging the government to expand tax support and ease labor regulations to encourage broader corporate investment.
Frequently Asked Questions
What specific sectors drove the Bank of Korea’s October index higher?
The manufacturing sector led the gains with its CBSI climbing 6.1 points to 105.6, fueled by increased production and inventory adjustments in semiconductors and automobiles. Non-manufacturing sectors also contributed, rising 4.3 points to 103.2 due to stronger sales, profitability, and an increase in foreign tourists during China’s National Day holiday.
How do large corporations and small and medium-sized enterprises differ in recent sentiment surveys?
While the Bank of Korea’s broader index hit a four-year-and-two-month high of 104.2 in October, the Korea Federation of SMEs’ Small Business Health Index for November dropped to 81.5. This decline reflects mounting pessimism among smaller firms regarding exports, operating profits, and domestic sales.
When was the Bank of Korea survey conducted and how many companies participated?
The central bank surveyed 3,639 businesses nationwide between Oct. 14 and 21, receiving responses from 3,450 firms. A separate SME survey by the Korea Federation of SMEs captured responses from 3,076 small and medium-sized enterprises between Oct. 14 and 20.
