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S.Korea business sentiment best in over a year
Reuters - Tuesday, June 30
(Updates with the economy ministry's survey, analyst comment
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SEOUL, June 30 - South Korean manufacturers turned more optimistic about their business outlook for the coming months, official data showed on Tuesday, suggesting the economy is approaching for a turnaround.
The Bank of Korea's business survey index for July rose for a fourth straight month to a 13-month high, while the economy ministry's similar index for the third quarter recorded the best reading in five quarters.
"An improved business outlook means companies will invest more sooner or later but the confidence index should sustain well above the benchmark 100 for a considerable period before the takeoff of the real economy," said Kim Seung-hyun, an economist at Taurus Investment & Securities.
He said business confidence had improved at a remarkable pace, partly on a technical rebound from the record low sparked by the financial crisis and partly because of unprecedented pump-priming measures and record rate cuts.
Central bank data showed that its June business survey index for the manufacturing sector jumped to a seasonally adjusted 82, the highest since June 2008 when it hit 87.
That compared with 74 for June and January's record low of 45, with many manufacturers growing more positive about an economic recovery and business prospects, it said.
The economy ministry said its business survey index for domestic manufacturers improved to 108 for the third quarter, up from 95 for the second quarter and 61 in the first.
Those in the electronics, car, machinery, steel and chemicals industries anticipated a far better business environment for the upcoming three months, it said.
Asia's fourth-largest economy barely averted a recession in the first quarter, with a 0.1 percent rebound from a 5.1 percent fall, driven by the government's unprecedented stimulus measures and record rate cuts.
Manufacturing accounts for about a third of South Korea's economic output and its performance has far-reaching effects on employment and incomes.
Financial markets showed little response to the strong business confidence data as investors awaited real economic indicators, including industrial output for May and trade and inflation data for June.
The local stock market <.KS11> was up 0.9 percent, and front-month treasury bond futures <KTBc1> were up 2 ticks as of 0243 GMT.
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