June SME Business Outlook Rebounds After 5 Months... Manufacturing Sector Remains 'Cloudy'

Average Operating Rate of Small and Medium Manufacturing Industries in April at 66.8%
Lowest Level Since March 2009 (65.5%)

Manufacturing site. Photo by Yonhap News

[Asia Economy Reporter Kim Heeyoon] The business outlook for small and medium-sized enterprises (SMEs) in June this year improved compared to the previous month, showing a recovery trend after five months. However, the manufacturing sector drew a downward curve due to the prolonged COVID-19 pandemic.

The Korea Federation of SMEs announced on the 28th that, based on a survey of 3,150 SMEs conducted in June this year, the Small Business Health Index (SBHI) for business outlook rose by 3.1 points from the previous month to 63.1.

The Federation explained, "While manufacturing is still sluggish due to delayed economic recovery and the prolonged COVID-19 situation, non-manufacturing sectors saw some improvement in consumer sentiment thanks to domestic demand stimulus measures such as emergency disaster relief funds provided by the government. Therefore, the overall industry outlook is expected to rise."

By sector, the manufacturing business outlook index recorded 64.4, down 0.4 points from the previous month, while the non-manufacturing index rose 4.9 points to 62.4. Construction and service industries also rose in tandem, reflecting optimism about future economic conditions.

In detailed sectors, the business outlook index rose in 12 industries including medical substances and pharmaceuticals, furniture, and clothing, whereas 10 industries such as automobiles and trailers, non-metallic mineral products, rubber products, and plastic products showed a declining trend.

In the non-manufacturing sector, eight industries including construction and services rose, but two industries?real estate and rental, and business facility management and business support services?declined.

Regarding economic fluctuation items, forecasts for domestic sales, exports, operating profits, and financial conditions stopped declining, and the employment outlook, which had been showing a counter-trend, also eased.

The management difficulties faced by SMEs (multiple responses allowed) were domestic demand slump (76.7%), excessive competition among companies (39.0%), and rising labor costs (37.5%), in that order.

The average operating rate of small and medium-sized manufacturing firms in April this year was 66.8%, down 3.0 percentage points from the previous month and 7.1 percentage points lower compared to the same month last year, marking the lowest level since March 2009 (65.5%) right after the global financial crisis.

This content was produced with the assistance of AI translation services.