South Korea's manufacturing business sentiment surpassed the baseline for the first time in three months in August, with both domestic demand and exports expected to improve further in September, according to a new survey.

The manufacturer's current-conditions Professional Survey Index (PSI) for August came in at 107, up 12 points from the previous month, the Korea Institute for Industrial Economics and Trade said Sunday. The reading topped the baseline of 100 for the first time since May.

Export and import cargo stacked at Sinseondae Pier in Busan Port. [Yonhap]
Export and import cargo stacked at Sinseondae Pier in Busan Port. [Yonhap]

The survey was conducted from Aug. 10 to 14 among 126 industry experts. A PSI reading above 100 indicates that more experts see conditions improving compared with the previous month, while a reading below 100 signals that more see conditions worsening.

Exports underpinned the manufacturing improvement in August. The exports PSI stood at 112, topping the baseline for four consecutive months, while production levels (109) and investment (108) also exceeded 100. Domestic market sales, however, came in at just 98, and profitability fell to 94, marking a second consecutive month below the baseline.

By sector, semiconductors (144) and mobile phones (143) posted the strongest readings. Biotech and health (124), displays (108), textiles (107) and machinery (106) also cleared the baseline. Home appliances (57), steel (78), automobiles (89) and chemicals (94) lagged behind.

In September, a broader recovery is expected as domestic demand joins exports in improving. The September manufacturing outlook PSI rose 13 points to 108. The domestic demand outlook climbed 10 points to 105, while the exports outlook gained 7 points to 118. Production levels (115), investment (116) and profitability (104) are all projected to exceed the baseline.

The ICT sector is expected to sustain its momentum, particularly strongly. The September ICT outlook PSI was forecast at 116, which would mark 16 consecutive months above the baseline. The machinery sector is also expected to return above the baseline at 102, while the materials sector is projected to recover to 100.

Among individual industries, semiconductors posted the highest September outlook PSI at 150, followed by biotech and health at 124, home appliances at 114, textiles at 107 and machinery at 106 — all above the baseline.

Steel, mobile phones and automobiles, which all underperformed in August, are each forecast to reach 100 in September, pulling out of negative territory. Displays (92) and chemicals (94), however, are expected to remain below the baseline, pointing to an uneven recovery across sectors.


y2k@heraldcorp.com