Due to the COVID Resurgence... SME September Business Outlook Declines Again

On the 30th, as the novel coronavirus infection rapidly spread mainly in the metropolitan area, a notice informing about shortened business hours was posted at a large coffee shop in Seoul due to the implementation of social distancing level 2.5. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Moon Hyewon] The business outlook for domestic small and medium-sized enterprises (SMEs), which had been improving due to the effects of emergency disaster relief funds, has weakened amid the resurgence of the novel coronavirus infection (COVID-19).

According to the 'September 2020 SME Business Outlook Survey' released by the Korea Federation of SMEs on the 30th, the business outlook index for September, based on responses from 3,150 domestic SMEs between the 13th and 27th, was 67.9, down 3.0 points from the previous month. This is 15.3 points lower than the same period last year.

The business outlook index fell to 60.0 in May this year due to the impact of COVID-19, marking the lowest level since statistics began. Subsequently, thanks to government policies such as emergency disaster relief funds, the index rebounded for three consecutive months: 63.1 in June, 68.0 in July, and 70.9 in August.

However, as COVID-19 has recently spread nationwide again, the perceived business conditions of SMEs have slowed down once more.

By industry, the manufacturing sector's business outlook index for September was 75.1, up 3.2 points from the previous month, while the non-manufacturing sector fell 6.3 points to 64.1.

Within manufacturing, 16 industries saw increases, including the automobile and trailer sector, which rose 10.6 points to 83.1, but six industries, such as furniture (72.4→64.5), declined.

In non-manufacturing, the construction industry dropped 8.9 points to 68.4, and the service industry fell 5.7 points to 63.3. Particularly in the service sector, 10 industries, including accommodation and food services, which fell from 70.4 in August to 53.3 in September, declined across the board.

Looking at business fluctuation items, forecasts for domestic sales (71.1→67.7), operating profit (67.9→64.3), and financial conditions (67.4→62.3) declined, while exports (69.3→76.2) increased.

In August, the main difficulties faced by SMEs (multiple responses allowed) were sluggish domestic demand at 74.3%, followed by excessive competition among companies (40.5%), rising labor costs (37.5%), and delayed collection of sales proceeds (22.9%).

Meanwhile, the average operating rate of small and medium manufacturing firms in July this year was 67.7%, up 0.7 percentage points from the previous month but down 6.8 percentage points from the same month last year. This marks a two-month consecutive increase since May this year (66.2%), which was the lowest since March 2009 (65.5%) following the global financial crisis.

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