South Korea's Composite Business Sentiment Index (CBSI) for all industries rose to 90.7 in May 2025, up 2.8 points from April, with sentiment also improving for June to 89.5, government data showed on Tuesday.

The manufacturing sector's CBSI rose 1.6 points to 94.7, while the outlook for the following month climbed 3.1 points to 93.1. In the non-manufacturing sector, sentiment jumped 3.6 points to 88.1, with a 3.3-point gain in the forward-looking index to 87.1.

The Economic Sentiment Index (ESI), a composite of business and consumer sentiment, rose 4.7 points to 92.2.

Analysts at ING Research said the overall sentiment gain likely reflects stable prices and expectations for increased support from a new government after the June 3 election. Softer interest rates were also seen easing debt servicing pressures for households.

Spending intentions have picked up, with stronger consumption anticipated in overseas travel, dining out and leisure. Early signs point to a recovery in retail and service activity, ING said.

Inflation expectations slipped to 2.6% from 2.8%, and ING noted the Bank of Korea may view this as progress toward its 2% inflation target.