By Lee Hyo-sik
Staff Reporter
A majority of manufacturers have predicted the economic downturn will continue for the time being due mainly to the prolonged slump in domestic consumption and rising business costs resulting from skyrocketing crude oil prices.




In its latest business survey of 2,491 producers nationwide Friday, the Bank of Korea (BOK) put the business survey index (BSI) for the manufacturing industry at 72, staying below 80 for the fourth consecutive month.

The BSI remained unchanged in September from 72 in August after marking 70 in July and 78 in June.

An index of 100 is regarded as the boom-or-bust line, with a reading below the benchmark 100 indicating pessimists over business conditions outnumber optimists.

In particular, the BSI for large companies dipped to 83 last month from 86 a month ago, while the index for small- and medium-sized enterprises (SMEs) rose to 77 from 75 over the same period.

The BSI for domestic market-oriented manufacturers inched up to 77 last month from 76 a month ago due mainly to a mild pick up in sales associated with the Chusok holiday, while the index for exporting companies remained at 85 in September, unchanged from the previous month.

The index for inventories dipped to 106 last month from 110 a month ago, meaning that more manufacturers have suffered from sluggish sales at home, with the profitability index remaining unchanged over the same period at 80.

About 31 percent of the surveyed manufacturers said weak domestic demand had led to depressed business conditions, while 22.3 percent of respondents pointed to skyrocketing international raw materials prices as the primary factor for the worsened conditions.

Among other reasons for the negative business environment, 15 percent blamed economic uncertainties and 6 percent said sluggish exports.

In the meantime, the BSI for the non-manufacturing industry marked 67 last month, remaining below 70 for the third straight month, even though the index rose from 62 a month earlier.

About 30 percent of non-manufacturing firms blamed depressed domestic consumption, while 19 percent pointed to economic uncertainties and 12 percent to intensifying competition.

``As the domestic economy is stuck in the doldrums, business sentiment for non-manufacturing sectors, including the service and construction industries, has been consistently worse than that of manufacturers over the past year,’’ BOK officials said.

Nobody is prepared to predict when business will turn around for local companies, adding that unless domestic sales pick up considerably, business sentiment is not likely to improve any time soon, the officials added.

leehs@koreatimes.co.kr