According to the Bank of Korea, the Composite Business Sentiment Index (CBSI) for all industries fell 1.2 points from a month earlier to 97.7 in June.
The decline marked the sharpest monthly fall since January 2025, when the index dropped 1.4 points.
The reading remained below the benchmark level of 100, indicating corporate sentiment was still weaker than its long-term average.
The setback came after a sharp rebound in May, when strong exports, a record-setting stock market and easing expectations over oil and currency shocks lifted business confidence close to the neutral threshold.
The latest data suggest the recovery has become more uneven rather than fully reversed, with exporters and large manufacturers continuing to benefit from resilient external demand while domestic-facing and service-sector businesses lose momentum.
Manufacturing CBSI rose to 101.2 in June from 100.8 in May, remaining above the benchmark for a second straight month.
It was the highest level since August 2022, when the index stood at 102.9.
The BOK said the improvement was driven mainly by funding conditions, which contributed 0.4 point, and new orders, which added 0.2 point.
Underlying manufacturing indicators pointed to a widening gap between export and domestic demand.
The export BSI rose to 96 from 94, while new orders increased to 88 from 87. Domestic sales, however, fell to 85 from 88, and overall sales slipped to 91 from 93.
Export-oriented manufacturers continued to outperform companies reliant on the domestic market. Exporters' CBSI rose to 106.4 from 105.3, while the reading for domestically focused firms edged down to 98.0 from 98.4.
The divide was equally evident by company size.
Large manufacturers saw their CBSI rise to 104.5 from 103.4. Small and medium-sized enterprises, however, slipped to 95.7 from 96.2, underscoring that the manufacturing recovery remains concentrated among larger exporters.
Non-manufacturing sentiment moved in the opposite direction.
The non-manufacturing CBSI fell to 95.4 from 97.5 as weaker sales and profitability, compounded by higher energy-related costs and sluggish consumption, dragged down the index. Sales and profitability each shaved 0.9 point off the non-manufacturing reading.
Lee Heung-hoo, head of the BOK's economic sentiment survey team, said manufacturing improved on robust semiconductor-led IT exports, while non-manufacturing weakened mainly because of sluggish construction activity and a payback from stronger holiday-related demand in arts, sports and leisure businesses in May.
The divergence suggests last month's broader rebound has yet to translate into a sustained recovery in domestic demand.
Corporate concerns also shifted in June.
Rising raw material prices remained manufacturers' biggest challenge, cited by 27.7 percent of respondents. But the share fell from 32.8 percent in May, suggesting some easing in commodity- and energy-related cost pressures.
Exchange-rate volatility, meanwhile, became a more visible burden. The share of manufacturers citing currency movements as a management concern rose to 7.8 percent from 5.0 percent, while the corresponding share among non-manufacturers increased to 5.7 percent from 3.7 percent.
The shift marked a contrast with May, when businesses appeared to be moving beyond concerns over oil prices, exchange rates and geopolitical uncertainty. In June, currency worries resurfaced even as raw material price pressures eased.
Companies also turned more cautious about the near-term outlook.
The July all-industry CBSI outlook fell to 95.2 from 97.6. The manufacturing outlook dropped to 98.2 from 100.3, while the non-manufacturing outlook declined to 93.2 from 95.9.
The Economic Sentiment Index (ESI), which combines business and consumer sentiment, fell to 96.8 in June from 97.5 in May.
Its cyclical component was unchanged at 95.1, suggesting the broader economy has yet to reach a clear turning point despite the resilience of semiconductor-driven exports.
The June survey was conducted from June 10 to 17 among 3,184 companies, including 1,780 manufacturers and 1,404 non-manufacturers.
Copyright ⓒ Aju Press All rights reserved.
