Korean manufacturers expect harsh September

South Korea’s business sentiment for September has slid again, as industrial players expect sagging exports and China’s economic slowdown to undo the Korea’s gradual recovery from the Middle East respiratory syndrome outbreak.

According to the Bank of Korea report released on Monday, the September manufacturers’ business sentiment index, or BSI, fell to 68, down two points from a month ago.

The BSI gauges the outlook of manufacturers on their business conditions for the coming month. An index reading of under 100 means that pessimists outnumber optimists.

“We understand that China’s slowing economic growth rate, Korea’s lackluster exports, summer vacation and other seasonal factors altogether undermined the BSI,” a Bank of Korea official said.

Since the MERS outbreak in May, the BSI for July crashed to 66, the lowest since it hit 58 in March 2009. The Seoul government declared an end to the disease spread here on July 28, pinning hopes on the recovery of sagging domestic consumption in the retail, leisure and tourism industries. Yet the Chinese economic downgrade has shaken business confidence.

The BSI for August recovered to 70 on the expectations of recovering consumption, yet the index for September declined again, following China’s slowing growth and recent stock market shock.

The Korean exporters’ BSI for September also fell to 71, down one point from a month ago. The same index for August was 68, down five points from a month ago.

The non-manufacturers’ BSI for September, however, showed a slight increase to 73, up two points from a month earlier.

Meanwhile, separate data by the BOK showed that the August economic sentiment index, a gauge of both business and consumer sentiment, stayed at 93, up one point from a month ago.

By Chung Joo-won (joowonc@heraldcorp.com)