Manufacturing Business Sentiment Surges on Exports, Large Corporations... "Highest in 3 Years and 10 Months"

Robust IT Exports Push Manufacturing CBSI to 101.2, Surpassing Long-Term Average for Second Month
Non-Manufacturing Declines Due to Base Effect from Last Month's Holiday Season
Overall Business Sentiment Drops Across All Industries, Marking First Decline in Three Months

The manufacturing business sentiment index, which turned "optimistic" last month, showed a slight further improvement, reaching its highest level in three years and ten months. Driven by a semiconductor supercycle, the expansion of exports has led to improved business sentiment in manufacturing, particularly among large corporations and export-oriented companies. In contrast, the non-manufacturing sector experienced a decline, mainly due to a base effect from last May's holiday season, when sectors such as arts, sports, leisure, and accommodations saw strong performance. This base effect contributed to the decline, dragging down overall business sentiment across all industries.

Manufacturing CBSI Remains Above Long-Term Average of 100 for Second Month

According to the "June 2026 Business Survey Results and Economic Sentiment Index (ESI)" released by the Bank of Korea on June 25, the Composite Business Sentiment Index (CBSI) for all industries this month was 97.7, down 1.2 points from the previous month. While manufacturing rose on the back of robust IT exports, non-manufacturing declined, mainly due to poor performance in construction and the base effect from the previous month's holidays in the arts·sports·leisure sectors, resulting in this overall outcome.

The CBSI is a business sentiment indicator calculated using key indices from the Business Survey Index (BSI) to gauge companies' perceptions of the overall economy. The long-term average (from January 2003 to December 2025) is set at 100 as the baseline. A reading above 100 indicates that companies' economic outlook is more optimistic than the long-term average, while a reading below 100 is interpreted as pessimistic.

The manufacturing CBSI climbed 0.4 points from the previous month to 101.2, marking its highest level since August 2022 (102.9) in three years and ten months. The index has risen for three consecutive months and has exceeded the long-term average of 100 for the second month in a row. Business sentiment was especially strong among large corporations and export-oriented companies. The index for large corporations rose by 1.1 points to 104.5, and for export companies, it increased by 1.1 points to 106.4. These are the highest levels since May 2022 (109.0) and June 2022 (107.5), respectively.

In June, manufacturing performance improved, particularly in electronics, video, and telecommunications equipment, petroleum refining·coke, and automobiles. The electronics, video, and telecommunications equipment sector benefited from strong results at semiconductor and component companies. Petroleum refining·coke was boosted by increased demand from downstream industries such as chemicals and by falling oil prices. For automobiles, performance improved mainly among component manufacturers.

Containers are piled up at Pyeongtaek Port, Gyeonggi Province. Photo by Yonhap News Agency

Non-Manufacturing Sector Declines Due to Base Effect from Last Month's Holiday Season

In contrast, the non-manufacturing CBSI dropped 2.1 points to 95.4. In June, non-manufacturing performance declined in construction, arts·sports·leisure, and transportation and warehousing. In construction, factors such as decreased new orders in plant and telecommunications infrastructure and rising construction material prices played a role. In arts, sports, and leisure, the base effect from the previous month's holiday season and increased facility maintenance and management costs contributed to the continued decline. The transportation and warehousing sector was hit hard by deteriorating performance at domestic transportation service providers and rising operating costs.

Lee Heung-hoo, head of the Economic Sentiment Survey Team at the Bank of Korea's Economic Statistics Department 1, stated, "Small and medium-sized enterprises and domestic market-oriented companies saw a decline this month and are still below the long-term average, but since early last year, their slump has been gradually easing. If supply chain disruptions are resolved and export-led growth spreads to the domestic market, business sentiment among SMEs and domestic market-oriented companies is also expected to improve gradually."

Manufacturing Outlook for Next Month Declines, Affected by Inventory Normalization Due to Supply Chain Improvement

The outlook for the business sentiment index for next month also fell by 2.4 points from the previous month to 95.2. Manufacturing is expected to decline by 2.1 points to 98.2, while non-manufacturing is projected to drop by 2.7 points to 93.2. Manufacturing is expected to decline mainly in chemicals and chemical products, other machinery and equipment, and fabricated metal products. Lee explained, "The decline in manufacturing is attributed to increased inventories and a slowdown in business conditions; the normalization of inventories, resulting from the easing of supply chain disruptions due to the Middle East war, has contributed significantly. Additionally, the business outlook was weighed down by a slowdown in business conditions caused by high exchange rates." In non-manufacturing, construction, transportation and warehousing, and information and communications are expected to lead the decline.

The Economic Sentiment Index (ESI), which combines the BSI and the Consumer Sentiment Index (CSI), decreased by 0.7 points from the previous month to 96.8. The cyclical variation, which removes seasonal factors, remained unchanged at 95.1.

Meanwhile, this survey was conducted from June 10 to June 17, targeting 3,524 corporate entities nationwide. Of these, 1,780 were manufacturing companies and 1,404 were non-manufacturing companies, with a total of 3,184 companies responding (90.4%).

This content was produced with the assistance of AI translation services.