S. Korea Business Sentiment Rises to 9-Month High on Inventory Decline

SEOUL, April 28 (Yonhap) -- Despite the ongoing Middle East crisis, business sentiment in South Korea rebounded in April as corporate inventories declined, a central bank survey showed Tuesday. The Composite Business Sentiment Index (CBSI) for all industries stood at 94.9 this month, up 0.8 point from March, according to the survey by the Bank of Korea (BOK). It marked the highest level since July 2024, when the figure stood at 95.9. A reading below 100 indicates that pessimists outnumber optimists. The index for manufacturers rose 2 points from a month earlier to 99.1 in April, while the figure for non-manufacturers grew 0.1 point to 92.1. "The improvement in business sentiment was partly driven by better manufacturing conditions amid solid export growth and higher selling prices. But the biggest factor was a decline in inventories, as companies used existing stock in response to disruptions in raw material supply stemming from the Middle East crisis," BOK official Lee Heung-hoo told a press briefing. "Excluding inventory effects, the index fell by 0.1 point for all industries and by 0.4 point for the manufacturing sector," he added. A separate CBSI index projecting business sentiment for May rose 0.8 point to 93.9, the highest level since August 2024. The May outlook among manufacturers rose 2.1 points to 98, while that for non-manufacturers remained unchanged at 91.2. "Consumers' outlook on household income and spending worsened despite improved export prospects in the manufacturing sector," Lee said. The conflict in the Middle East, which began in late February following U.S.-Israeli strikes on Iran, has escalated into a broader regional conflict, pushing up global oil prices and disrupting supply chains as the Strait of Hormuz has effectively been closed. The survey, conducted earlier this month, covered 3,205 companies, including 1,781 manufacturers.