Business sentiment among Daegu companies hit its highest point in seven quarters, yet remains well below the benchmark, underscoring the need for broad policy support as a prolonged construction slump continues to weigh on the local economy.
According to a business sentiment index (BSI) survey conducted by the Daegu Chamber of Commerce and Industry on 210 local firms — 160 in manufacturing and 50 in construction — the fourth-quarter manufacturing outlook index rose 10 points from the previous quarter to 78, while the construction outlook index held flat at 36, signaling that the sector's downturn will persist.
The index uses 100 as its baseline: readings above 100 indicate that more companies hold a positive outlook, while readings below 100 reflect a majority with a negative view.
Breaking down the manufacturing sector by market orientation, the fourth-quarter outlook index for export-oriented firms climbed 16 points from the prior quarter to 83, while domestic-focused firms rose 9 points to 77.
The export-firm outlook index was the highest recorded in the past seven quarters.
In construction, every sub-index remained far below the 100 baseline, pointing to a continued broad-based slump in the sector.
However, seven of eight sub-categories in the fourth-quarter construction outlook improved from the previous quarter. Building materials prices posted the sharpest gain, rising 26 points from 24 to 50, while building materials supply and funding conditions each rose 8 points, to 50 and 36, respectively.
New contract volume and corporate profit each gained 4 points, to 44 and 34, while new contract value and construction profit margins each edged up 2 points.
Labor supply was the only sub-index to deteriorate, falling 8 points from 82 to 74.
Particularly concerning, 8 in 10 respondents — 53.8 percent who said they would fall somewhat short and 24.3 percent who said they would fall significantly short — expected to miss their annual operating profit targets.
The top reasons cited were deteriorating sales and order conditions (35.2 percent), rising production costs including raw materials and energy (32.9 percent), higher financing costs and difficulty securing funds (11.0 percent), and rising labor costs and difficulty securing workers (10.5 percent).
"It is encouraging that the manufacturing outlook has improved, but 8 in 10 local companies expect to fall short of their operating profit targets this year," said Lee Sang-gil, standing vice president of the Daegu Chamber of Commerce and Industry. "Policy support is needed to boost corporate vitality through measures such as stimulating domestic demand, easing the cost burden on businesses, and improving local investment conditions."
kbj7653@heraldcorp.com
