Experts' expectations for improvements in South Korea's manufacturing sector have significantly declined over the past month. While the semiconductor industry is projected to continue its positive trend due to increased demand for artificial intelligence (AI), concerns about economic sluggishness have grown in key sectors such as automotive, mobile phones, and chemicals.
According to the 'Industrial Economic Expert Survey Results' released by the Korea Institute for Industrial Economics and Trade on October 25, the manufacturing outlook index (PSI) for November dropped to 102, down 11 points from the previous month's forecast of 113. The PSI is a measure derived from surveys of industry experts, where a score above 100 indicates expectations of improvement compared to the previous month, while a score below 100 suggests a decline.
Although the November forecast slightly exceeds the baseline of 100, the drop is significant. The domestic outlook PSI fell from 111 to 101, a decrease of 10 points, while the export outlook dropped from 118 to 107, down 11 points. The production level outlook also fell from 119 to 102, a decline of 17 points, and the profitability outlook decreased from 103 to 91, falling below the baseline.
Sector-specific forecasts varied. The semiconductor outlook PSI rose to 159, up 15 points from the previous month's 144, marking the highest among major manufacturing sectors. In contrast, the mobile phone sector saw a dramatic decline, plummeting from 100 to 53, a drop of 47 points, indicating the weakest outlook. The automotive sector also fell from 123 to 93, a decrease of 30 points, while the chemical sector dropped from 106 to 89, down 17 points.
By industry type, the information and communication technology (ICT) sector maintained a PSI of 110, above the baseline, while the machinery and materials sectors fell below it, with PSIs of 97 and 95, respectively.
Factors contributing to the sector evaluations include strong demand for high-bandwidth memory (HBM) and increased investment in AI servers for the semiconductor industry. Conversely, the mobile phone sector faces rising costs due to increased memory semiconductor prices and concerns over slowing consumer demand. The automotive sector is impacted by the growing market share of Chinese vehicles and sluggish domestic and export performance.
Current evaluations of the manufacturing sector have also worsened compared to the previous month. The current manufacturing PSI stands at 102, down 5 points from 107 last month. Although it had exceeded the baseline for three consecutive months, it has now turned downward. The domestic current PSI for October rose by 1 point to 107, while the export PSI fell from 119 to 107, a drop of 12 points. Profitability decreased from 97 to 92, remaining below the baseline.
By sector, the semiconductor industry maintained a strong position with a PSI of 147, up 3 points. The steel and shipbuilding sectors also rose to the baseline of 100. However, the mobile phone sector saw a sharp decline of 39 points to 73, and the chemical sector fell by 23 points to 94, both below the baseline. The display and automotive sectors also could not escape the downward trend.
This survey was conducted from October 12 to 16 among 127 experts from major domestic industries.
* This article has been translated by AI.
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