Let’s slow down the third corona spread… The business experience rebounded after a month

Input 2021.01.28 06:00

Manufacturers experience improved economy, but… Concerns about rising raw materials and labor costs ↑
Partial mitigation of quarantine guidelines and improvement of Gyeonggi-do for non-manufacturers in response to increased heating demand

This month, the business experience of Korean companies rebounded again after a month. As the third spread of the novel coronavirus infection (Corona 19) subsided, the perception of the economy was improved, centered on exports and SMEs.

According to the’January 2021 Business Survey Index (BSI)’ released by the Bank of Korea on the 28th, the manufacturing industry’s BSI this month was 85, up 3 points (p) from the previous month. The BSI of the manufacturing industry rebounded to the same level as in November (85), the highest level in 8 years and 7 months. In December, there was a slight decline in the aftermath of the third corona spread. From the 12th to the 19th, the BOK conducted a survey of 3255 corporations nationwide (85.9% response rate).

The BOK diagnosed that the experienced economy in the manufacturing industry rebounded as the third spreading trend slowed. As demand for automobile materials and downstream industries recovered, rubber and plastics (14p) and metal processing (13p) rose significantly. However, in the case of chemical substances and products (-8p), they fell in the aftermath of rising raw material prices.

By company size and type, export companies showed the highest increase at 7p. Small and medium-sized enterprises (SMEs) rose by 4p and large enterprises (2p), and domestic companies remained flat.

Manufacturers predicted that the economic sensation in one month will also get better. The manufacturing industry outlook BSI rose 4p to 81. As of this month, it is expected that the improvement will be mainly made in rubber and plastics (16p) and metal processing (14p), and other mechanical equipment (10p) is also expected to increase thanks to the increase in demand for industrial and semiconductor facilities. In addition, SMEs (6p), domestic companies (6p), large companies (4p), and export companies (1p) are all expected to improve.

However, manufacturers were concerned about rising raw material prices, labor shortages, and labor costs. Uncertain economic conditions (24.0%) and sluggish domestic demand (13.0%) accounted for the highest proportions as management difficulties. Compared to that, it increased 2.8%p and 1.9%p.

The non-manufacturing industry BSI rose 2p to 70. Electricity for heating demand in winter
Gas and vapor (14p) rose, and wholesale and retail (11p) rose as the quarantine guidelines were partially eased. On the other hand, in the case of information and communications (-4p), it fell as IT service orders decreased. Non-manufacturing industry outlook for one month The BSI rose 6p, focusing on specialized, science and technology (12p), wholesale and retail (11p), and business facilities, business support, and leasing (10p).

The economic sentiment index (ESI), calculated by combining the BSI with the consumer trend index, rose 7.0p to 93.1. The cyclical fluctuation value, which removed seasonal factors and irregular fluctuations, rose 2.8p to 92.7.