Manufacturing sector to pick up in second quarter

The manufacturing industry looks to be coming around just in time for spring.

According to the Korea Development Bank (KDB), a survey of 1,218 manufacturers on business prospects for the second quarter of this year showed that the Business Survey Index (BSI) stood at 103. A BSI of over 100 means that more people are optimistic about future business conditions than those who are not. KDB officials said Wednesday that this is the first time since the third quarter of last year that the index surpassed 100. The BSI for the first quarter of this year was 73.

By industry, the electricity and electronics and electronic parts sectors recorded relatively high BSIs of 115 and 105, respectively, on the back of expectations that declines in semiconductor prices would slow in the coming months and exports of high-value-added electronic appliances would increase. Automobiles, machinery, textiles and petrochemical goods were predicted to continue to suffer. The BSI was 88 for automobiles, 92 for machinery, 96 for textiles and 97 for petrochemical goods. The domestic-consumption and export industries recorded BSIs of 118 and 117, respectively. The index for financing came to 104, indicating that financing problems will ease somewhat in the coming quarter. The BSI for facility investments stood at 102.

The Korea Chamber of Commerce and Industry (KCCI) also predicted that the real economy would regain some energy in the second quarter. Sales of general machinery are expected to increase by 16.2 percent, automobiles by 10.0 percent and electronic goods by 6.2 percent from the first quarter, the KCCI said.

The service industry is also showing signs of recovery.

According to the National Statistical Office, the service industry grew 6.3 percent in January from the same month last year based on added value. It was the first time in eight months that the industry`s monthly growth rate improved. The rate stood at 12.3 percent in May last year but reached only 4.3 percent last December.

The financial insurance industry recorded negative growth figures for two straight months last year, with minus 5.6 percent in November and minus 5.4 percent in December. The rate rebounded to 9.4 percent in the black in January on the strength of a brief bullish run on the stock market. The medical industry grew 14.6 percent from the previous month after a medical dispute was solved and doctors` revenues increased.

Hong Chan-Sun tigera@donga.com