October SME Business Outlook Index Falls by 1.0 Point

Average Operating Rate of Small and Medium Manufacturing Industries in August Remains Unchanged from Previous Month

The number of companies that do not have a positive outlook on the business conditions of small and medium-sized enterprises (SMEs) in October increased compared to the previous month. The Korea Federation of SMEs (Chairman Kim Ki-moon) announced the 'October 2023 SME Business Outlook Survey' conducted on 3,055 SMEs on the 26th.

The Business Outlook Index (SBHI) for October was 82.7, down 1.0 point from the previous month, failing to continue the upward trend seen in August (79.1→79.7, 0.6 points↑) and September (79.7→83.7, 4.0 points↑). Compared to the same month last year, it fell by 2.4 points. The SBHI indicates that if the value is 100 or above, more companies responded positively than negatively, while a value below 100 indicates the opposite.

The business outlook for manufacturing in October rose 1.4 points from the previous month to 88.5, while non-manufacturing fell 2.1 points to 80.1. Construction (83.5) increased by 0.9 points from the previous month, whereas services (79.4) decreased by 2.7 points.

By industry, in manufacturing, 14 sectors showed an increase compared to the previous month, centered on wood and wood products (74.9→87.5, 12.6 points↑), printing and recorded media reproduction (82.3→93.8, 11.5 points↑), and chemicals and chemical products (79.9→90.0, 10.1 points↑). Conversely, 9 sectors declined compared to the previous month, including beverages (106.2→88.1, 18.1 points↓), textile products (88.7→79.2, 9.5 points↓), and medical, precision, optical instruments and watches (93.6→86.6, 7.0 points↓).

In non-manufacturing, construction (82.6→83.5) rose by 0.9 points from the previous month, while services (82.1→79.4) fell by 2.7 points. Within services, six sectors increased, including accommodation and food services (87.0→92.2, 5.2 points↑) and arts, sports, and leisure-related services (80.9→87.6, 6.7 points↑), but four sectors declined, including wholesale and retail trade (80.2→75.7, 4.5 points↓) and education services (84.2→81.1, 3.1 points↓).

Looking at the outlook by item across all industries, domestic sales (81.9→82.3), operating profit (79.0→79.5), and financial conditions (78.6→79.2) rose compared to the previous month, while exports (84.9→82.5) declined. Employment level (93.7→93.5), which is a counter-trend indicator, is expected to slightly improve compared to the previous month.

Comparing the SBHI for this October with the average SBHI for the same month over the past three years, manufacturing is expected to improve in all items compared to the previous three-year average. Non-manufacturing shows a deterioration in export outlook but improvement in other items compared to the previous three-year average.

The top management difficulties for SMEs in September were sluggish domestic demand (60.1%), followed by rising labor costs (46.6%), excessive competition among companies (34.4%), and rising raw material prices (34.2%). The average operating rate of small and medium-sized manufacturing enterprises in August was 72.1%, remaining steady compared to the previous month and rising 0.3 percentage points compared to the same month last year.

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