Manufacturing Business Sentiment Suffers Biggest Drop In Four Years
Sentiment among domestic manufacturers deteriorated sharply within a single month. The upward momentum driven by strong semiconductor exports has reversed, with the index posting its largest drop in four years. The decline is attributed to a combination of factors, including lower operating rates ca
The sentiment among domestic manufacturers in South Korea plummeted significantly within a single month, marking the steepest decline in four years. The manufacturing Composite Business Sentiment Index (CBSI) fell by 4.3 points in September 2026, reaching 99.5, its lowest reading since September 2022. This downturn is attributed to a combination of factors, including labor strikes, reduced operating rates, Chuseok holiday-related closures, and Middle East geopolitical tensions.
The automobile sector suffered the most, with production dropping 22 points due to strikes and holiday disruptions. The chemicals and chemical products industry also struggled, with production falling 12 points and new orders declining 9 points, mainly due to transportation disruptions, rising raw material costs, and restructuring fallout in the petrochemical sector. The electronics, video, and communications equipment sector saw a 7-point increase in product inventories as demand waned.
Despite the overall decline, some companies strategically built up inventories to prepare for post-Chuseok demand. However, labor disputes in the shipbuilding industry have emerged as a new concern. HD Hyundai Heavy Industries and Hanwha Ocean are resuming wage negotiations on September 29, with the former demanding a 149,600-won ($110) base pay increase and a 30% share of operating profits.
The latter has also called for improved performance bonus systems. If labor unrest escalates, it could further hamper the recovery in manufacturing sentiment during an otherwise robust economic supercycle.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
