Korea: Forward-looking manufacturing business confidence ticks up in October
October 1, 2019
The Bank of Korea’s forward-looking business confidence indicator for manufacturers ticked up to 73 in October from 72 in September, while confidence in the non-manufacturing sector also increased to 74 points in October from 72 in the month prior. Both readings remained well below the 100-point threshold separating pessimism from optimism.
The slight improvement in business sentiment among manufacturers was led by less pessimistic views towards sales prices, while businesses’ views regarding profitability were unchanged in October. That said, manufacturers were slightly more pessimistic regarding sales volumes. The Bank does not collect information about the drivers of sentiment among non-manufacturing firms.
Going forward, U.S.-China trade tensions, political rifts with Japan and a subdued global growth outlook will continue to depress business confidence. Meanwhile, a slowdown in global demand for technology will continue to weigh on Korean manufacturers and the external sector. That said, record-high fiscal spending aimed at offsetting the negative external headwinds dragging on the export-driven economy should buoy growth. Moreover, the potential for another rate cut this year could also provide a spark to investment going forward.
Author: Steven Burke, Economist