The manufacturing business survey index rose six points to 86 from 80 in the third quarter, according to the KCCI, which surveyed 2,413 manufacturers nationwide.
A reading above 100 means more companies expect business conditions to improve from the previous quarter, while a reading below 100 indicates the opposite. The index has risen for two consecutive quarters but remains below the neutral level.
Export-oriented companies' BSI rose five points to 91, while the index for domestic-focused manufacturers increased seven points to 85. The two measures increased together for the first time in five quarters.
KCCI attributed the improvement among exporters to stronger shipments of major products including semiconductors and cosmetics, while it linked the gain among domestic-focused companies to easing imported raw-material costs as the won stabilized.
The number of industries with a BSI above 100 increased to five from one in the third quarter.
Semiconductors recorded a BSI of 139, the highest since KCCI began compiling the sector figure and the fourth consecutive quarter above 100.
Cosmetics followed at 120, with medical and precision equipment at 108, shipbuilding at 103 and pharmaceuticals and biotechnology at 102.
The semiconductor index jumped 26 points from the third quarter, while cosmetics gained 20 points and medical and precision equipment rose 28 points.
Electronics and communications moved in the opposite direction, falling 13 points to 80 amid higher costs for memory chips, copper-clad laminates, copper and logistics, according to KCCI.
Nonmetallic minerals rose 27 points to 88 as imported raw-material costs eased and the autumn construction season began.
Improved sentiment did not translate into equally strong profit expectations. Some 60.4 percent of manufacturers expected full-year operating profit to fall short of targets set at the beginning of the year.
Of the respondents, 43.5 percent expected profit to miss their target by less than 10 percent and 16.9 percent anticipated a larger shortfall. Another 31.7 percent expected to meet their target, while 7.9 percent projected profit above their initial goal.
Rising raw-material and energy costs were cited as the biggest obstacle to meeting profit targets by 43.2 percent of respondents, followed by weaker sales and order conditions at 24.9 percent and rising labor costs and hiring difficulties at 11.7 percent.
Exchange-rate volatility accounted for 6.8 percent of responses, followed by worsening trade conditions at 4.1 percent and regulatory and licensing issues at 1.3 percent.
"Six in 10 companies still expect operating profit to fall short of their targets despite two consecutive quarters of improvement in manufacturing sentiment," said Kang Min-jae, head of KCCI's economic policy team.
Kang added that policy support was needed to stabilize raw-material supplies and ease energy-cost burdens, with production costs remaining companies' biggest concern.
AJP Takeaways
- South Korea's manufacturing BSI rose six points to 86 for the fourth quarter in a KCCI survey, marking a second consecutive increase but remaining below the neutral level of 100.
- Semiconductor manufacturers recorded a BSI of 139, the highest since KCCI began compiling the sector figure, while export- and domestic-focused companies both reported improved sentiment.
- Korea Chamber of Commerce and Industry respondents remained cautious on profitability, with 60.4 percent expecting 2026 operating profit to fall short of targets set at the beginning of the year.
Copyright ⓒ Aju Press All rights reserved.