Companies not feeling optimistic

The business survey index (BSI) remained stable in September compared with the previous month, but Korean companies continued to feel cautious about general economic conditions, data from the Bank of Korea (BOK) showed Wednesday.

The BSI for September was 69, the same as the August’s reading, but since it remained below 100, it indicates Korean businesses believe the general corporate environment remains challenging.

The BSI, compiled by survey results from nearly 2,900 companies, looks at various factors to determine business conditions, including inventories levels, production facilities, investments, new hiring and revenues to determine present business conditions and future outlooks.

The manufacturing sector BSI was worse than the non-manufacturing sector, with a reading of 68, compared with the non-manufacturing sector’s 70.

Within the manufacturing sector, the shipbuilding sector’s BSI was far lower than the average at 57, and the electrical equipment manufacturing sector’s reading was 58. The textile industry’s BSI came in at 50. Automakers’ BSI fell to 66, the first time ever to fall to that level and nearly half the reading of 128 recorded in July 2010. Its August BSI reading was 73.

Domestic sales at the top five automakers including Hyundai Motor, Kia Motors, GM Korea, Ssangyong Motor and Renault Samsung Motors during August were 622,542 units, down 2.5 percent year-on-year, according to industry sources. Their overseas sales also saw negative growth during the same month.

“Amid slowdown worries in China, major exporters such as automakers appear to feel worse about their business conditions,” said Park Seong-bin, a Bank of Korea official in charge of corporate statistics.

But the consumption sector fared better, with beverage makers’ BSI reading 86, up from 84, and food makers’ figure rising to 73 from 69 in August.

In terms of the size of the companies, conglomerate manufacturers’ BSI reading was 72, while that of small-and-medium sized companies was 62.

Some 27 percent of manufacturers surveyed picked sluggish domestic consumption as the most challenging factor -- up from 24.7 percent in August.

Other factors included economic uncertainties (19.9 percent) and increasing competition (10.7 percent).

The non-manufacturing sector’s September BSI was 70, the same as the previous month. Its outlook BSI was 73.

Their sales BSI was up 2 points to 79, and the October outlook BSI was 82.

Among non-manufacturing players, the real estate and rental service industry recorded the highest BSI reading of 82, up from previous month’s 80. Transportation and arts and leisure industries’ reading came out at 78, up from 77 and 72 respectively.

Meanwhile the overall economic sentiment index (ESI), an indicator of the private sector’s sentiment, was 93, the same as the previous month.

BY PARK JUNG-YOUN [park.jungyoun@joongang.co.kr]