Business confidence sags to 18-month low

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Business confidence sags to 18-month low

Korean companies’ business confidence hit an 18-month low due to the sluggish job market and a slowdown in key exports, such as automobiles.

The business survey index (BSI) of manufacturers fell one point to 73 in August compared to the previous month to hit its lowest level since February 2017, according to the Bank of Korea on Thursday.

Those in the non-manufacturing sector are also fretting over the current economic conditions, as their sentiment fell 2 points to 74.

A reading above 100 indicates that a majority of survey participants were optimistic about current economic conditions, while a reading below 100 means they are negative.

The downbeat results are the latest in a series of negative economic indicators.

The central bank announced earlier this month that consumer sentiment hit a 17-month low in August, with the composite consumer sentiment index (CCSI) declining 1.8 points from the previous month to 99.2.

Of the manufacturers, small and mid-sized enterprises (SMEs) held more pessimistic views, and the index of SME manufacturers plunged 6 points to 66.

Analysts believe the negative outlook is linked to worsening industry conditions in manufacturing sectors like shipbuilding and automobiles.

Other factors could include increasing expenses stemming from the minimum wage hike and the 52 hour workweek pushed by the government.

An association representing SMEs based in Ulsan went to great lengths to boycott the government’s measures because the policies could strain their finances.

The association members are mostly small part manufacturers in the steel, automobile and metal industries. The latest BSI was based on a survey of 3,274 firms conducted from Aug. 14-22, the central bank said.

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