Biz sentiment worsens in Nov. amid rises in resource prices

South Korea’s business sentiment edged down in November due to increased prices of raw materials and energy, a local think tank said Friday.

The business survey index of the country’s top 600 companies by sales stood at 100.6, down by 2.8 percentage points from 103.4 in October, the Korea Economic Research Institute data showed.

According to KERI, while the figure managed to stay above the 100-threshold that shows optimists outnumbered pessimists, the 2.8-point decrease reflects concerns over rising resource prices, and possible decreases in exports as Korea’s major trade partner China is experiencing an economic slump.

The outlook for the coming month appeared divided by industrial sector.

The manufacturing sector cast a gloomy outlook, posting 96.5 in BSI, while the non-manufacturing sector raised the index figure to 105.9.

KERI explained the high prices of raw materials and energy resources, including electricity, have weighed down on sentiment for the manufacturing industry. Concerns are also raised over reduced exports, as well as China, South Korea’s major export destination, which is also suffering an economic downturn and energy shortage.

A relatively positive outlook came from the non-manufacturing sector, as prospects rose for demand recovery amid accelerating nationwide vaccination drive and the country’s “With Corona” scheme to loosen social distancing regulations, KERI said.

“Supply disruption may occur as a price surge in raw materials, including oil and electricity, will raise production costs and affect the profitability of manufacturers,” a KERI official said.

“The government should come up with measures to stabilize, and minimize the effects of the price increases.”

By Jo He-rim (herim@heraldcorp.com)