Bank of Korea says manufacturing sentiment rises on new orders

The Bank of Korea said Thursday that business sentiment among manufacturers improved in July as new orders and current business conditions strengthened. The composite business sentiment index (CBSI) for the manufacturing sector rose 2.0 points from the previous month to 103.2.

New orders contributed 0.8 percentage points to the gain, while improved business conditions added another 0.7 points, the central bank said. Sentiment improved among both export-oriented and domestic-focused firms, with the export sector index reaching 107.5 and the domestic sector hitting 100.0.

In contrast, the CBSI for non-manufacturing industries fell 0.2 points to 95.2, dragged down by worsening financial conditions which subtracted 0.5 points from the index. Service industries within the sector also declined to 95.3 from 97.2 the prior month.

Across all industries, the composite index stood at 98.5 in July, up 0.8 points from June, while the outlook for the following month advanced 1.3 points to 96.5. Manufacturers cited rising raw material costs as their primary management difficulty at 21.8%, followed by economic uncertainty at 20.6% and sluggish domestic demand at 16.4%. For non-manufacturing firms, weak domestic sales remained the top concern at 18.4%, alongside labor shortages and rising wage costs at 13.5%.

The broader Economic Sentiment Index (ESI), which combines business and consumer surveys, increased 1.1 points to 97.9. Separately, the consumer sentiment index edged up 0.2 points to 106.8.