Business sentiment for January worsened as the COVID-19 pandemic shows no signs of a slowdown despite tougher social distancing rules, a survey showed Tuesday.

The business survey index (BSI) of the country's top 600 companies by sales came to 91.7 for January, down from the 98.9 for December, the Korea Economic Research Institute (KERI) said in a statement.

A reading below 100 means pessimists outnumber optimists, while a figure above the benchmark means the opposite.

"The third wave of COVID-19 is weighing on business sentiment. The government needs to deliver aggressive policy support to companies struggling with the pandemic," a KERI official said.

On Sunday, health authorities extended the current Level 2.5 distancing measures in the capital area and the Level 2 restrictions in the rest of the country until Jan. 3 on concerns over the impact on the economy.

The Korea Disease Control and Prevention Agency will decide whether to move on to Level 3, the highest in its five-tier scheme, before the extended deadline.

The BSI has stayed below 100 for 32 consecutive months after reaching 100.3 in May 2018, said KERI, a research institute under the Federation of Korean Industries, South Korea's biggest business lobby.

KERI's analysis for this month gave an index of 93.4, down from 98 a month earlier despite the prolonged pandemic, it said.

KERI said 363 out of the 600 companies responded to the survey, which was conducted from Dec. 15-22. (Yonhap)