South Korean manufacturers' business confidence for July declined to the lowest level in 18 months on lingering concerns about the eurozone debt crisis and sluggish domestic demand, the central bank said Thursday.

   The index of manufacturers' outlook on business conditions fell to 90 for July from 97 for June, according to the Bank of Korea (BOK). The index measures manufacturers' outlook on business conditions for the coming month.

   It marked the lowest level since the sentiment index reached an identical 90 for January 2010. The July data also marked the steepest monthly decline since the index for November 2010 fell by 7 points.

   A reading below 100 means pessimists outnumber optimists. The index is based on a nationwide survey of 2,561 companies conducted between June 15-22.

   "The index declined mainly because manufacturers' outlook turned grim due to the Greek sovereign crisis and concerns over sluggish domestic demand," said Wang Hee-jin, an official at the BOK.

   The eurozone debt crisis and signs of a slowing U.S. economy are raising concerns that South Korea's exports may be dented.

   The index measuring manufacturers' assessment of current business conditions declined to 91 in June, down from 94 in May and the lowest level since 88 registered in February, the BOK said.

   Local manufacturers picked gains in raw material prices, weak domestic demand and the local currency's ascent to the dollar as the main difficulties in doing business.

   A sub-index gauging exporters' business outlook for July declined by 9 points to 89 while an index measuring domestic-focused firms' outlook came in at 90, down 6 points from June, the BOK added.

   The BOK maintained its 2011 growth forecast at 4.5 percent, but revised up the inflation projection to 3.9 percent this year from an earlier forecast of 3.5 percent.

Source: Yonhap News (June 30, 2011)