Consumer sentiment improves in July

South Korea’s consumer sentiment index rebounded toward its previous high over three months in July, as concerns over corporate restructuring and the Brexit vote both at home and abroad fell, following policy measures to cushion the economy from possible shocks.

The consumer sentiment index stood at 101 this month, up 2 points from a month before, the Bank of Korea said Wednesday.

Along with the April sentiment at 101, the July index marks the highest since December last year when it stood at 102. A reading above 100 means that optimists outnumber pessimists.

Consumer sentiment had been below 100 since May this year amid rising concerns over corporate restructuring and youth unemployment.

Given the sluggish job market, consumption and investment with forecasts of slower growth, consumers are expected to further tighten their spending, as a separate index measuring households’ sentiment toward their current living conditions in July showed no change from June.

The index showed current conditions stood below 100 at 91 this month, while another index gauging people’s sentiment of their economic conditions in six months improved slightly, though it remained below 100 at 98 in July, up 2 points from June, the central bank data showed.

However, household sentiment of future income marked 100, up 2 points in the same period, suggesting expectations of increases in income as people are saving more of their earnings.

The monthly index was based on a survey of 2,070 households nationwide from July 13-20.

South Korea’s economy grew 0.7 percent in the second quarter of this year backed by consumption on government policy support, performing slightly better than the first quarter when Asia’s fourth-largest economy expanded merely 0.5 percent.

Korea’s economy has remained in zero percent growth territory for three straight fiscal quarters.

By Park Hyong-ki (hkp@heraldcorp.com)