SEOUL, December 29 (AJP) -South Korean companies expect business conditions to remain weak in January, with sentiment slipping across both manufacturing and services amid prolonged weakness in construction and steel and early signs of softer demand in semiconductors, the Federation of Korean Industries (FKI) said Monday.
The group said its Business Survey Index (BSI) for January is projected at 95.4, down from 98.7 in December. A reading below 100 means more firms expect conditions to worsen than improve. The sentiment for December business conditions was lower at 93.7.
FKI noted that the outlook index has now remained below the 100 threshold since February 2022, underscoring the prolonged downturn in domestic demand and volatile external front.
By sector, the manufacturing outlook came in at 91.8, while nonmanufacturing was higher at 98.9.
Within manufacturing, pharmaceuticals (125.0) and textiles, apparel, leather and footwear (107.7) were among the few industries expected to improve. General and precision machinery, wood furniture and paper, and food, beverages and tobacco were clustered at the neutral 100 level.
Most major industries, however, remained below the baseline. Automobiles and other transport equipment stood at 94.1, electronics and communications equipment at 88.9, metals and metal processing at 85.2, petroleum refining and chemicals at 86.2, and nonmetal mineral products at 64.3.
FKI said weakness in construction and steel has persisted, while a temporary slowdown in demand for electronics and communications equipment due to spike in chip prices, has weighed on overall manufacturing activites.
In nonmanufacturing, electricity, gas and water scored 115.8, information and communications 113.3, leisure, lodging and dining 107.1, and wholesale and retail trade 103.6, indicating improving conditions.
By contrast, transportation and warehousing (95.7), construction (85.7), and professional, scientific and business support services (78.6) were expected to weaken.
For January, domestic demand was forecast at 95.4, exports at 96.7 and investment at 92.6. Employment (92.6), financing conditions (94.5) and profitability (94.5) were also expected to remain in contractionary territory.Lee Sang-ho, head of FKI’s economic and industrial policy division, said that although economic growth is expected to improve compared with the previous year, corporate sentiment has yet to recover.
“Structural weaknesses in sectors such as construction and steel persist, while rising costs and uncertainty continue to weigh on companies,” Lee said, calling for measures to support industrial restructuring, ease energy and cost burdens, and avoid uniform regulations that increase management uncertainty.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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