Businesses grow less optimistic in June

Korean businesses became less optimistic about the outlook for June amid concern surging oil prices and a stronger currency will curb earnings.
The Federation of Korean Industries, which represents the nation’s biggest industrial companies, said its business confidence index dropped to 105.6 from 110.9 in May. A reading higher than 100 indicates optimists outnumber pessimists.
Rising oil and commodity prices increase costs for companies and consumers in an economy that imports almost all its energy and mineral needs. A stronger won makes Korea’s products more expensive overseas, potentially eroding earnings from exports, which have been the key driver of the nation’s longest economic expansion in a decade.
“A rise in international oil and raw material prices deteriorates companies’ profitability,” the Seoul-based federation said in a statement. “Still, consumer sentiment recovered and also corporate investment in factories picked up, while exports remain healthy.”
The deterioration in business confidence is in contrast to recent reports suggesting Asia’s third-largest economy is gaining pace. The federation polled 600 of Korea’s largest companies to compile the confidence index.