South Korea’s Manufacturing Outlook Slips to 103 for July as Semiconductors Stay Strong
Summary
- The Korea Institute for Industrial Economics & Trade said expectations for improvement in manufacturing eased as the July manufacturing outlook index fell to 103 from 107 a month earlier.
- Specialists said the semiconductor outlook index rose to 161, with continued big tech investment and rising demand for AI chips expected to further improve the sector.
- By contrast, chemicals (index 72), steel (index 78) and mobile phones (outlook index 81) faced a negative outlook amid worsening business conditions, rising cost burdens, trade barriers and geopolitical uncertainty.
Forecast Trend Report by Period
Expectations for an improvement in South Korea’s manufacturing sector have lost momentum. Industry specialists remained upbeat on semiconductors, but outlooks for chemicals and steel stayed bleak.
The Korea Institute for Industrial Economics & Trade said on June 21 that its July manufacturing outlook index fell 4 points from the previous month to 103. The index declined from the prior month for the first time in three months. The June current-conditions index came in at 99, down 8 points from 107 a month earlier. A reading below 100 means business conditions worsened from the previous month.
By industry, specialists still expect semiconductor conditions to improve next month. The July semiconductor outlook index rose to 161 from 156 a month earlier. Continued investment by big tech companies and rising demand for artificial intelligence chips are set to further improve the sector, the survey showed.
The outlook for chemicals and steel remained downbeat. The July chemicals outlook index fell to 72 from 100 a month earlier. Specialists cited a reverse-lagging effect as a reason for the weaker view. If the war in the Middle East ends, a decline in global crude prices could reduce the value of oil bought at higher prices by refiners, increasing the likelihood of inventory valuation losses.
The steel outlook index plunged to 78 in July from 122 in June. Specialists said the effect of trade barriers has yet to be reflected in prices. Higher logistics costs caused by rising oil prices, along with demand swings depending on whether geopolitical uncertainty eases, also weighed on the steel outlook index.
The July mobile phone outlook index stood at 81. That was up 1 point from 80 a month earlier, but it remained below the 100 threshold. The June mobile phone current-conditions index was 81, down 12 points from 93 in the previous month. Higher semiconductor prices and a weaker exchange rate increased cost burdens, clouding both current conditions and the outlook for mobile phones.
Park Jong-kwan, Hankyung.com reporter pjk@hankyung.com
Bloomingbit Newsroom
news@bloomingbit.ioFor news reports, news@bloomingbit.io
