Omicron Surge and Raw Material Price Increase Cloud SME Business Outlook for April

April Outlook, Down 0.2p from Previous Month
Manufacturing Down 3.5p...Non-Manufacturing Up 1.4p
Domestic Demand Slump Biggest Challenge for Companies

[Asia Economy Reporter Kim Bo-kyung] As the COVID-19 pandemic prolongs and oil and raw material prices surge, the business outlook index for small and medium-sized enterprises (SMEs) has shown a downward trend again.

The Korea Federation of SMEs announced on the 30th that the business outlook index for April 2022 was 84.7, down 0.2 points from the previous month, based on a survey of 3,150 SMEs titled 'April 2022 SME Business Outlook Survey.'

In the manufacturing sector, the possibility of a delayed peak in the Omicron wave and the impact of soaring international oil and raw material prices have spread economic uncertainty, leading to a decline in the overall industry index.

However, with the easing of social distancing measures, the business outlook index rose sharply in some service sectors. Notably, the arts, sports, and leisure-related services sector (up 16.8 points) and the accommodation and food service sector (up 13.3 points) showed significant increases.

The manufacturing sector's business outlook for April was 86.5, down 3.5 points from the previous month, while the non-manufacturing sector rose 1.4 points to 83.7. The construction industry (80.0) increased by 3.4 points, and the service industry (84.5) rose by 1.1 points compared to the previous month.

In manufacturing, seven industries saw increases centered on 'Non-metallic Mineral Products (87.7→92.5)' and 'Automobiles and Trailers (91.4→94.6),' while 15 industries, including 'Beverages (97.6→84.3)' and 'Food Products (92.0→79.1),' experienced declines.

In the service sector, five industries increased, led by 'Arts, Sports, and Leisure-related Services (75.2→92.0)' and 'Accommodation and Food Services (63.5→76.8),' whereas five industries, including 'Transportation (85.2→76.3)' and 'Publishing, Video, Broadcasting, Telecommunications, and Information Services (90.3→84.6),' declined.

The employment outlook, which is a reverse trend index, is expected to slightly improve from 94.3 to 92.5 compared to the previous month. However, forecasts for domestic demand (84.4→84.3), exports (92.2→90.6), operating profit (80.4→79.9), and financial conditions (81.2→79.4) all declined.

The main difficulties faced by SMEs were sluggish domestic demand (59.6%), followed by rising raw material prices (50.3%), increased labor costs (47.7%), and excessive competition among companies (37.2%).

The average operating rate of small and medium-sized manufacturing firms in February 2022 was 71.3%, down 1.0 percentage point from the previous month but up 1.5 percentage points compared to the same month last year.

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