Nov. business confidence sinks

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Nov. business confidence sinks

Business confidence remained unchanged this month despite unfavorable conditions that included the Galaxy Note7 debacle. However, business sentiment for November has deteriorated due to the struggling domestic market and exports.

In October, the business sentiment index (BSI) was 71, same as in the previous two months, the Bank of Korea said Friday. A reading above 100 indicates that the majority of the survey participants are optimistic about economic conditions while a reading below 100 indicates otherwise.

Larger companies that rely on exports such as Samsung Electronics and Hyundai Motor considered the current economic situation unfavorable.

The business confidence of big companies fell 2 points from last month to 73 while exporters also fell 2 points during the same period to 70. On the contrary, small and midsize companies’ confidence rose 3 points to 67 while companies whose businesses heavily relied on the domestic market inched up 1 point to 71.

“The struggling domestic market was the biggest concern,” said a BOK official. “But also the uncertain economic situations as well as export were also major concerns.”

While 9.9 percent of those polled picked exports as a major concern last month, 12.2 percent did this month.

The outlook for next month fell three points to 72.

Business confidence in the automotive industry, however, improved as a labor union strike finally ended. Amid the lengthy strike, business confidence last month fell to its lowest in more than seven years at 65. But this month it rose 2 points to 67.

The non-manufacturing industry’s BSI like that of the manufacturing industry fell. It dropped 1 point from the previous month to 81. The industry’s biggest concern was the deteriorating domestic market, which accounted for 24 percent of responses, followed by uncertain situations with 15 percent. Rising labor costs and a workforce shortage went up 7.8 percent.

Business confidence and its outlook could worsen since the survey was conducted between Oct. 14 and. 21, just before the scandal involving the Blue House emerged.

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