Biz sentiment improves for 3rd consecutive month in May: BOK survey

South Korea's business sentiment improved for the third straight month in May amid eased concerns about political instability and the United States' sweeping tariff scheme, a central bank poll showed Wednesday.

The Composite Business Sentiment Index for all industries came to 90.7 in May, up 2.8 points from the previous month, according to the survey by the Bank of Korea.

It marks the highest level since November, when the index came to 91.8. It also marks the sharpest gain since May 2023, when the index added 4.4 points from a month earlier.

The CBSI among manufacturers climbed 1.6 points from a month earlier to 94.7 in May, and that among nonmanufacturers went up 3.6 points to 88.1.

The index measures corporate prospects for business conditions. A reading below 100 means pessimists outnumber optimists.

Business sentiment had deteriorated since late last year, hitting the lowest level in about 4 1/2 years of 85.3 in February, due mainly to former President Yoon Suk Yeol's declaration of martial law and uncertainties triggered by US President Donald Trump's new tariff scheme.

Following the martial law imposition, Yoon was impeached in late December and formally removed from office in April, setting the stage for the presidential election scheduled to take place next Tuesday.

Another key factor that led to the improvement in business sentiment was the US' announcement made in April to pause the imposition of reciprocal tariffs on trade partners, including a 25 percent duty on South Korean imports.

Negotiations are under way between South Korea and the US on the tariff scheme, as the two sides have agreed to pursue a "July package" deal addressing trade and related issues, aiming to reach an agreement before July 8, when Trump's 90-day suspension of the tariffs is to expire.

The outlook for May also added 3.2 points to 89.5, the survey showed.

"Despite the improvement, the index remains below the long-term average of 100, so it is difficult to view the current situation as optimistic," BOK official Lee Hye-young told a press briefing.

"The US tariff postponement had a positive effect on the manufacturing sector, but it is likely a short-term benefit. As overall exports remained weak, it remains to be seen whether this upward trend will continue," the official added.

The poll, conducted earlier this month, involved 3,297 companies, including 1,852 manufacturing firms, the BOK said. (Yonhap)