Korea's major corporations reported business sentiment falling to an 89.9 index reading for August, according to a Korea Employers Federation survey of the country's top 600 companies by revenue announced on the 28th. The Business Survey Index (BSI) dropped 8.1 points from the previous month, marking the first time the index fell below 90 since May's 87.5 reading. Heightened tensions in the Middle East region drove the decline, with both manufacturing (88.4) and non-manufacturing (91.5) sectors turning negative for the first time in three months. A BSI reading below 100 indicates more companies hold pessimistic economic outlooks compared to the previous month. The electronics and telecommunications equipment sector, which includes semiconductors, provided the only bright spot with a 118.8 reading - the highest among all industries surveyed.
Manufacturing and Non-Manufacturing Sectors Both Turn Negative
The manufacturing sector BSI fell 7.2 points to 88.4, while the non-manufacturing sector dropped 9.1 points to 91.5, converting to negative territory. This marked the first time both sectors simultaneously showed pessimistic forecasts since the May outlook three months prior. Among sub-categories, funding conditions registered 87.8, domestic demand reached 90.8, and profitability stood at 93.5 - all performing below baseline levels.
![BSI Trend Chart]()
Comprehensive BSI Trend [Source: Korea Employers Federation]
Electronics and Telecom Equipment Sector Records 118.8 BSI
Within manufacturing, the electronics and telecommunications equipment sector - which includes semiconductors - recorded a BSI of 118.8, the highest level across all industries. The sector's export BSI reached 143.8 and investment BSI hit 112.5, reflecting expectations for expanded exports and facility investments driven by the global semiconductor boom. The overall investment BSI registered 97.0, falling short of the baseline but representing the highest level since September 2022.
Petroleum Refining and Chemical Sector Hits 17-Year Low at 57.7
The petroleum refining and chemical industry BSI plummeted to 57.7, marking the lowest reading since February 2009 - a span of 17 years and 6 months during the aftermath of the global financial crisis. Concerns over rising raw material and energy costs stemming from prolonged Middle East conflicts, combined with deteriorating product spreads, contributed to the sector's decline.
In the non-manufacturing sector, leisure, lodging, and dining showed strength at 116.7 on expectations of vacation season demand. However, the remaining six industries - including electricity, gas, water, construction, and information technology - all fell below the baseline. The export BSI maintained 100.0, holding at the baseline level.
![Manufacturing and Non-Manufacturing Sector August Forecast BSI]()
Manufacturing and Non-Manufacturing Detailed Sector August Forecast BSI [Source: Korea Employers Federation]
Korea Employers Federation Cites Middle East Instability as Primary Factor
Lee Sang-ho, Economic Division Director at the Korea Employers Federation, stated: "While some key export sectors such as semiconductors are playing a supporting role, overall corporate sentiment is contracting due to instability in the Middle East situation." The federation conducted the survey targeting the top 600 companies ranked by revenue.
FAQ
What caused Korean business sentiment to fall to 89.9 in August?
The Korea Employers Federation's survey of the top 600 companies by revenue showed the BSI dropped 8.1 points from the previous month to 89.9, driven by heightened tensions in the Middle East region. This marked the first decline below 90 since May's 87.5 reading.
Which Korean stock sector showed the strongest performance in the August BSI survey?
The electronics and telecommunications equipment sector, which includes semiconductors, recorded the highest BSI at 118.8 among all industries. The sector's export BSI reached 143.8 and investment BSI hit 112.5, reflecting the global semiconductor boom.
How did the petroleum and chemical sector perform in Korea's August business sentiment survey?
The petroleum refining and chemical industry BSI fell to 57.7, the lowest level since February 2009 - a 17-year, 6-month low. Prolonged Middle East conflicts raised concerns about raw material and energy costs while product spreads deteriorated.
