Manufacturing Conditions Seen Staying Weak in Q4; Raw Material Costs Biggest Hurdle

Korea Institute for Industrial Economics and Trade surveys 1,500 manufacturers
Improved outlook for wireless communication equipment and displays
Raw material cost burden highest at 53%

Domestic manufacturers expect the economic downturn to continue in the fourth quarter.

The Korea Institute for Industrial Economics and Trade said on October 18 that its survey of 1,500 manufacturers, conducted from September 7 to 18, found that the Business Survey Index (BSI) outlook for business conditions in the fourth quarter stood at 97, unchanged from the previous quarter. A BSI above 100 indicates that more companies expect business conditions to improve, while a reading below 100 means more expect them to worsen.

By category, the sales outlook fell to 97 in the fourth quarter from 99 in the third quarter. The export outlook declined to 100 from 101, while the equipment investment outlook fell to 99 from 100. By contrast, the outlooks for inventories and current account profits each rose by 1 point from the previous quarter, to 99 and 95, respectively.

By industry, the sales outlooks for wireless communication equipment (103) and displays (102) were above 100. Semiconductors and chemicals each posted 99, while automobiles, shipbuilding, bio and healthcare each stood at 97. Steel (91) and textiles (89) were relatively low.

By company size, large manufacturers showed expectations of improving business conditions, with a sales outlook of 104, while the figure for small and medium-sized manufacturers stood at just 95.

Manufacturers cited rising raw material costs as the main factor weighing on their business activities. In a survey of current issues that allowed multiple responses, “increasing burden from raw material costs” ranked highest at 53%, followed by “weak domestic demand and rising inventories” (38%) and “continued external uncertainty” (36%).

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