SMEs "Expecting Rebound in May"... Business Outlook Index Hits Highest in 7 Months

Small and medium-sized enterprises (SMEs) expected the economy to rebound starting in May.

According to the 'May 2023 SME Business Outlook Survey' conducted by the Korea Federation of SMEs from the 13th to the 20th, targeting 3,150 SMEs, the Small Business Health Index (SBHI) rose by 3.1 points from the previous month to 83.8. This is the highest level in seven months since October last year (85.1). However, it is 3.8 points lower compared to the same period last year. An index above 100 indicates that more companies responded positively, while below 100 indicates the opposite.

The May business outlook for manufacturing rose by 0.2 points from the previous month to 86.5, while non-manufacturing increased by 4.4 points to 82.7. Construction (81.3) rose by 6.5 points from the previous month, and services (83.0) increased by 3.9 points.

In manufacturing, nine sectors including Apparel, Apparel Accessories, and Fur Products (down 10.8 points), and Other Machinery and Equipment (down 4.8 points) declined. Conversely, 14 sectors, led by Industrial Machinery and Equipment Repair (up 13.9 points) and Textile Products (up 9.3 points), showed improvement. The Beverage sector (100.8) exceeded 100, forecasting an economic upturn.

In non-manufacturing, construction (74.8→81.3) rose by 6.5 points from the previous month, and services (79.1→83) increased by 3.9 points. Within services, three sectors including Transportation (down 6.5 points) and Real Estate (down 0.9 points) declined. Seven sectors, including Educational Services (up 8.4 points) and Wholesale and Retail Trade (up 5.9 points), showed improvement.

Domestic sales (80.6→84.6), exports (86.7→86.9), operating profit (78.2→81), and financial conditions (78.1→80.8) all rose compared to the previous month. Employment (93.6→95.2) also increased, indicating a continued labor shortage.

Comparing the SBHI for May this year with the average SBHI for the same month over the past three years, manufacturing is expected to improve in all categories. Non-manufacturing is also expected to improve across all categories.

In April, the biggest management difficulty for SMEs was sluggish domestic demand (59.5%). This was followed by rising labor costs (49.9%), rising raw material prices (37.3%), excessive competition among companies (34.3%), and high interest rates (25.9%).

The proportion of responses citing excessive competition among companies increased from 31.1% to 34.3% compared to the previous month, while responses citing rising raw material prices (41.6%→37.3%), rising labor costs (53.6%→49.9%), high interest rates (29.2%→25.9%), and sluggish domestic demand (62.3%→59.5%) decreased.

As of March, the average operating rate of small and medium-sized manufacturing firms was 72.6%. This is an increase of 1.1 percentage points from the previous month and 0.2 percentage points higher than the same month last year.

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