Manufacturing sentiment drops to more than 2-year low

South Korean manufacturers’ business confidence for November fell to an over 2-year low as dimmer global economic prospects heightened uncertainty, the central bank said Monday.

The index of manufacturers’ outlook on business conditions reached 82 for November, down from 86 tallied for October, according to the Bank of Korea. The index measures manufacturers’ expectations for the coming month.

The November outlook marked the lowest level since the index came in at 80 for August 2009.

A reading below 100 means pessimists outnumber optimists. The index is based on a nationwide survey of 2,480 companies conducted between Oct. 17 and 24.

“A set of worsening external economic conditions clouded local manufacturers’ business confidence,” said Lee Seong-ho, an official at the BOK. “Domestic-focused firms’ outlook was bleaker on concerns that the local currency’s sharp fall is feared to jack up import costs of raw materials.”

An index measuring exporters’ business outlooks for November stayed unchanged at 87 from the previous month, while an indicator gauging domestic-focused firms’ biz confidence fell to 80 from 86 over the cited period, the BOK added.

Local manufacturers picked sluggish domestic demand as well as the local currency’s weakness and high volatility as their main challenges in doing business.

The downbeat outlook came as a global economic slowdown and the eurozone debt crisis are upping economic uncertainty, raising chances that the Korean economy will likely grow at a slower pace than earlier estimated.

BOK Gov. Kim Choong-soo said earlier that the growth of the Korean economy is likely to miss the central bank’s estimate of 4.3 percent for this year.

Asia’s fourth-largest economy grew 0.7 percent on-quarter in the third quarter, slowing from 0.9 percent on-quarter expansion in the preceding quarter.

An index measuring manufacturers’ assessment of current business conditions came to 82 in October, up from 81 in September, the BOK added. 

(Yonhap News)