A Business Survey Index for Korean Service Industries

The Business Survey Index (BSI) is a crucial in­dicator for understanding the current business climate as well as future conditions over short periods (months and quarters). It is a useful policy tool thanks to its timeliness and function as a leading indicator. Furthermore, the BSI serves as an index of business sentiment, and is often combined with the Consumer Sentiment Index (CSI) to form the Economic Sentiment Index (ESI), a fundamental economic statistic. The Business Survey is conducted by the Bank of Korea (BOK) forms the basis for an essential BSI and serves as the primary reference index for this study. The BOK’s BSI survey is noted for its statistical rigor and its positive, ongoing rela­tionship with the surveyed companies. However, there remains room for some improvement. It focuses to an excessive degree on manufacturing and utilizes overly broad industrial categories, especially for the service sector. The objective of this study is to overcome the limitations of the existing BOK BSI survey of firms in non-manufacturing sectors. By using Korean Standard Industrial Classification (KSIC) subcategories(2-digit) as the basis for industrial classification and designing a survey that con­siders the unique characteristics of the service industry, in this paper we establish a BSI survey system for the service industry that could better inform industrial policy. The Center for Service Industry at the Korea Institute for Industrial Economics & Trade began conducting quarterly BSI surveys of the service industry using this framework in 2024.