Experts are forecasting a grim outlook for South Korea’s manufacturing sector in May, with nearly all industries except semiconductors expected to experience declines in key indicators such as production, domestic demand, and exports, falling far below the average.
According to a report released by the Korea Institute for Industrial Economics & Trade (KIET) on April 20, the May Professional Survey Index (PSI) for manufacturing, based on responses from 127 experts, came in at 73. This figure is 27 points below the baseline of 100 and represents a sharp 26-point drop from the previous month’s 99. It is also the second consecutive month the index has fallen below the threshold.
The PSI is a diffusion index where a reading closer to 200 indicates broad expectations of improvement over the previous month, while a number nearer to 0 signals a pessimistic outlook. The latest figures suggest a clear shift toward negative sentiment among experts regarding the near-term performance of the manufacturing sector.
A closer look at the sub-indicators shows that the export outlook PSI stood at 65, which was lower than the domestic demand PSI of 81. This suggests that South Korea’s manufacturing sector, which is heavily reliant on exports, is likely to struggle. Other key indicators also remained below the baseline of 100, with the production index at 79, investment at 80, and profitability at 71, reflecting a broad deterioration in overall business conditions.
By sector, major industries all posted PSI figures below the baseline of 100. The index for information and communications technology (ICT) was 74, materials recorded 69, and machinery came in at 67. Notably, the ICT index dropped by 35 points and the materials index by 34 points compared to the previous month, marking particularly steep declines. The machinery index also declined by 22 points from the previous month.
The only sub-sector to exceed the 100 baseline was semiconductors, which came in at 110. Analysts attributed this to rising global demand fueled by the growth of artificial intelligence (AI) technologies.
Among the surveyed sectors, only a few came close to the baseline of 100. The shipbuilding sector recorded a PSI of 93, and the biotechnology and health sector came in at 91. In contrast, other key sectors remained well below the baseline. The PSI for displays was 79, for mobile phones it was 47, for home appliances 45, for automobiles 46, for chemicals 80, for steel 78, and for textiles 53.
In April, the manufacturing PSI was recorded at 80, falling below the baseline of 100 for the first time in two months. Compared to the previous month, the index declined by 27 points, marking its first drop in four months. The domestic demand index also declined to 81, ending a four-month upward trend. The export index fell to 79, and the production index dropped to 84, with both indicators falling below the baseline for the first time in three months.
KIET noted, “Among experts, optimism about the manufacturing economy in May is rapidly fading. A recovery remains weak across most sectors except semiconductors.”
