Manufacturers perk up on expectations of stimulus

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Manufacturers perk up on expectations of stimulus

Manufacturers’ business confidence for February rose to the highest level in four months, underscoring optimism that the incoming government will unveil economic stimulus steps, the central bank said yesterday.

The index of manufacturers’ outlook on business conditions came in at 72 for February, up from 70 tallied for January, according to a monthly survey by the Bank of Korea. The index measures manufacturers’ expectations for the coming month.

It marked the highest level since the index hit an identical 72 in October last year, according to the BOK.
A reading below the benchmark 100 means pessimists outnumber optimists. The index is based on a nationwide survey of 2,546 companies conducted from Jan. 15-22.

Expectations for the incoming government’s expansionary policy may be reflected in manufacturers’ overall outlook, but exporters presented grimmer forecasts due to the won’s ascent to major currencies, according to an official at the central bank.

The index of manufacturers’ assessment of current business conditions came in at 70 in January, up from 68 recorded for December and the highest level in five months.

The incoming government of President-elect Park Geun-hye is widely expected to take economic stimulus packages.

The global economy shows some signs of improvement though economic uncertainty, including the euro zone debt crisis. Recent data on U.S. housing markets and China’s fourth-quarter growth show some signs of recovery, analysts say.

More manufacturers picked the won’s gain as a major setback in doing business in January than they did in December, underscoring concerns that exporters are squeezed by the currency volatility.

The index gauging exporters’ outlook on business conditions reached 73 for February, down from 75 for January. The index measuring smaller firms’ business prospects came in at 70 for next month, compared with 66 for January, reflecting their optimism that the incoming government will support small and medium enterprises.

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