South Korea's Composite Business Sentiment Index (CBSI) for December dropped to 87, down by 4.5 points from the previous month, according to government data released on Friday.

The outlook also decreased by 7.3 points to 82.4. In the manufacturing sector, the CBSI stood at 86.9, a decrease of 3.7 points, with the outlook falling to 85.2.

The non-manufacturing sector saw a larger drop, with the CBSI falling by 5.0 points to 87.1, and the outlook plunging 10.0 points to 80.3.

The Economic Sentiment Index (ESI) for December dropped sharply to 83.1, reflecting a 9.6-point decline. This indicates a downturn in both business and consumer sentiment, suggesting growing concerns over the economy.

In manufacturing, the Business Condition BSI decreased by 6 points to 61, and production levels fell by 1 point to 76. New orders dropped by 2 points to 73, while the Financial Situation BSI weakened by 3 points to 76. Inventories saw a slight increase of 1 point to 106.

For the non-manufacturing sector, business conditions dropped by 4 points to 65, sales decreased by 2 points to 73, and profitability fell by 3 points to 72. Financial conditions also weakened, dropping by 3 points to 74, reflecting challenges across the sector.

The cyclical component of the ESI, which smooths out seasonal variations, decreased by 1.1 points to 89.7, remaining above long-term averages but signaling weaker sentiment.