South Korea Business Sentiment Turns Positive for March After Four-Year Slump

Business Survey Index Climbs Above 100 for First Time in 47 Months​

Seoul, February 24: South Korea’s business sentiment has turned positive for March, marking its first rebound in four years, supported by strong exports of semiconductors and automobiles.

The Business Survey Index for the country’s top 600 companies by sales stood at 102.7 for March, according to a monthly survey conducted by the Federation of Korean Industries. A reading above 100 indicates that optimists outnumber pessimists, while a figure below 100 signals the opposite.

The index had remained below the 100 benchmark for 47 consecutive months through February, underscoring the prolonged weakness in corporate sentiment before the current turnaround.

Manufacturing Sector Leads Recovery​

The improvement was led by the manufacturing sector, where the outlook index rose sharply to 105.9 for March, compared with 88.1 in February. This marks the highest reading since May 2021, when the index stood at 108.6.

Within manufacturing, the machinery industry recorded a robust reading of 128.6, while the electronics and telecommunication equipment sector posted 113.3, reflecting resilience in export-driven segments.

In contrast, the non-manufacturing sector remained cautious. Its outlook index came in at 99.4 for March, indicating continued pessimism among service-oriented industries.

An official from the federation noted that the improvement in business sentiment is significant, particularly after a prolonged economic slowdown, and stressed the importance of sustained efforts to ensure the recovery does not prove temporary.

Producer Prices Rise for Fifth Straight Month​

In parallel, South Korea’s producer prices continued their upward trend in January, rising for the fifth consecutive month.

Preliminary data from the Bank of Korea showed that the Producer Price Index increased 0.6 percent month on month to 122.50 in January. This follows a 0.4 percent rise in December.

The index has been on a steady climb since September, when it rose 0.4 percent, followed by gains of 0.3 percent in both October and November.

On a year-on-year basis, producer prices were up 1.9 percent in January.

Semiconductor price gains and higher agricultural costs were key drivers behind the increase. The Producer Price Index is closely watched as an indicator of future consumer inflation, as higher input costs can eventually be passed on to consumers in the months ahead.

Outlook Hinges on Sustained Export Strength​

The rebound in business sentiment, combined with rising producer prices, signals shifting dynamics in Asia’s fourth-largest economy. While export strength in key sectors has lifted confidence, the divergence between manufacturing and non-manufacturing sectors highlights uneven recovery trends across the broader economy.