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South Korea’s economy grew 1.2 percent in the third quarter, supported by recovering consumption, investment and strong exports, including semiconductors. / Source: Yonhap News

South Korean businesses reported their strongest sentiment in 13 months in November, supported by a sustained semiconductor super-cycle and recovering consumer demand, particularly in retail and wholesale.

According to the Bank of Korea’s business survey released on November 26, the Composite Business Survey Index (CBSI) for all industries rose 1.5 points from the previous month to 92.1. The outlook for December stood at 91.1, roughly unchanged from October.

The CBSI is based on nine major Business Survey Indexes (BSI)—five in manufacturing and four in non-manufacturing—using a long-term average of 100 as the benchmark. A reading above 100 indicates optimism, while below 100 reflects pessimism. After rebounding in August, the index paused in October but regained momentum in November.

Manufacturing and non-manufacturing both improve

By sector, the manufacturing CBSI rose 0.3 points to 92.7, supported by improvements in inventory and business conditions. The non-manufacturing index climbed 2.3 points, backed by better financing conditions and improved profitability.

For December, manufacturers expect a slight dip to 91.7, while non-manufacturing firms forecast a modest increase to 90.7.

Lee Hye-young of the Bank of Korea’s Economic Sentiment Survey Team said the combination of more business days in November and strong semiconductor demand boosted manufacturing, while retail-driven consumer sentiment helped lift non-manufacturing.

However, she noted that rising exchange rates have negatively affected financing conditions in some industries. “Since the overall index remains below the benchmark of 100, it is still difficult to say conditions are fully favorable,” she added.

Electronics, metals, refining lead gains; retail, ICT rebound

In manufacturing, electronics, video and communications equipment, metal processing and petroleum refining showed improvement.

In non-manufacturing, retail and wholesale, ICT services and transportation and warehousing all registered gains.

Meanwhile, the Economic Sentiment Index (ESI)—which combines BSI and the Consumer Sentiment Index—fell 0.3 points to 94.1. The seasonally adjusted ESI cyclical component, however, rose 0.8 points to 94.6.

The survey was conducted from November 11 to 18 with responses from 3,269 firms nationwide (1,824 in manufacturing and 1,445 in non-manufacturing).