May manufacturing sentiment at 8-month high

South Korean manufacturers’ business confidence for May rose to the highest level in eight months due to optimism about the economic recovery, the central bank said Wednesday.

The index of manufacturers’ outlook on business conditions reached 100 for May, up from 95 for April, according to the Bank of Korea (BOK). The index measures manufacturers’ outlook on business conditions for the coming month.

The May reading marked the highest level since 104 seen in September 2010, and the sentiment index rose above the benchmark 100 after staying below the level for the seventh straight month in April.

A reading above 100 means optimists outnumber pessimists. The index is based on a nationwide survey of 2,502 companies conducted between April 13-20.

The index measuring manufacturers’ assessment of current business conditions reached 98 in April, up from 93 registered in March and the highest level since an identical 98 in August last year, the BOK said.

The South Korean economy maintained growth momentum, backed by brisk exports and improving domestic demand. But inflation risks are growing amid rising oil and commodity prices, increasing burdens for local firms to shoulder rising costs.

Local manufacturers picked gains in raw material prices, still-weak domestic demand and uncertain economic conditions as the main difficulties in doing business.

A sub-index gauging the outlook for purchasing prices of raw materials came in at 139 for May, down from 142 for April, the central bank said.

The BOK maintained its 2011 growth forecast at 4.5 percent, but revised up the inflation projection to 3.9 percent this year from an earlier forecast of 3.5 percent. 

(Yonhap News)