December SME Business Outlook Index 83.5... Slight Rebound on With Corona Optimism

SME Business Outlook Index Rises 2p... Slight Rebound Centered on Service Sector
Manufacturing and Non-Manufacturing Up 0.6p and 2.7p Respectively... Construction Also on the Rise
Average Operating Rate of Small Manufacturing at 71.5%... Down 0.4%p from Previous Month

November Sees Export Activity, Busan Port Filled with Cargo
(Busan=Yonhap News) Reporter Jo Jeong-ho = On the 11th, export and import cargo piled up at Sinsundae and Gamman docks in Nam-gu, Busan. Export value increased by nearly 30% compared to the same period last year as of November 10. 2021.11.11
ccho@yna.co.kr
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[Asia Economy Reporter Junhyung Lee] The business outlook for small and medium-sized enterprises (SMEs) next month has slightly rebounded compared to this month. This is interpreted as reflecting expectations for phased daily recovery (With Corona) and year-end demand.

The Korea Federation of SMEs announced on the 29th that the Small and Medium Business Outlook Index (SBHI) for next month’s business conditions rose by 2 points to 83.5 compared to this month, based on a survey conducted from the 15th to the 23rd of this month targeting 3,150 SMEs for the 'December 2021 SME Business Outlook Survey.' Compared to the same month last year, it increased by 11.5 points. An SBHI above 100 means that more companies view the economy positively than negatively. Below 100 means the opposite.

The improvement in the business outlook is due to expectations of domestic demand recovery from With Corona and year-end demand. Despite difficulties in raw material supply and shipping/logistics, the Korea Federation of SMEs explained that the outlook index slightly rebounded across all industrial sectors, especially in the service industry where operating hours have improved.

Trend of Small and Medium Business Outlook Economic Index (SBHI).
[Photo by Korea Federation of SMEs]

By industry, the manufacturing SBHI rose by 0.6 points to 86.4 compared to this month. The non-manufacturing SBHI increased by 2.7 points to 82. Construction (82.3) and service industries (81.9) rose by 1.2 points and 3 points, respectively.

Specifically, in manufacturing, the business outlook rose in 11 sectors centered on 'primary metals' and 'paper and paper products.' Conversely, 9 sectors including 'printing and recorded media reproduction' and 'food products' declined.

In the service industry, the business outlook for 'accommodation and food services' rose sharply to 78.5 from 71.5 this month. This is seen as a result of improved business conditions following the implementation of With Corona. On the other hand, three sectors including 'real estate and rental services' and 'arts, sports, and leisure-related services' showed a downward trend.

Export outlook fell from 91.2 this month to 90.1 next month. However, domestic demand, operating profit, and financial condition outlooks all rose compared to this month. The employment business outlook slightly declined by 0.7 points from 95.2 to 94.5 but showed signs of improvement. The employment level SBHI is a counter-cyclical figure that falls when the economy recovers and rises when the economy worsens.

Average Operating Rate Trend of Small and Medium Manufacturing Enterprises.
[Photo by Korea Federation of SMEs]

Last month, the average operating rate of small and medium manufacturing enterprises was 71.5%. This is a 0.4 percentage point decrease from the previous month but a 2 percentage point increase compared to the same month last year. By company size, the average operating rate of small enterprises increased by 0.3 percentage points to 67.4% compared to the previous month. The average operating rate of medium enterprises decreased by 1.1 percentage points to 75.5%. During the same period, general manufacturing (71.2%) fell by 0.5 percentage points, while innovative manufacturing (74.9%) rose by 0.4 percentage points.

More than half of SMEs cited 'domestic demand slump (57.8%)' as the main difficulty this month. This was followed by 'rising raw material prices (44.8%)' and 'increasing labor costs (42%).'

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