Small Businesses Still Struggling in May... Business Outlook Index Unchanged at 75.7

The Small Business Health Index (SBHI) for May remained unchanged from the previous month. Compared to the same period last year, it declined by 3.5 points.

The Korea Federation of SMEs announced the results of the "May 2025 Small Business Economic Outlook Survey" on April 29, 2025. The survey was conducted from April 11 to April 17, 2025, targeting 3,078 small and medium-sized enterprises. If the index is above 100, it indicates that more companies view the economic outlook positively than negatively; if it is below 100, the opposite is true.

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The business outlook index for May was 75.7, the same as the previous month. In the manufacturing sector, the index fell by 1.8 points from the previous month to 80.8, while in the non-manufacturing sector, it rose by 0.7 points to 73.4.

By industry, in manufacturing, eight sectors showed an increase compared to the previous month, led by non-metallic mineral products (66.1→72.3, up 6.2 points) and industrial machinery and equipment repair (80.8→83.8, up 3.0 points). In contrast, 15 sectors, including printing and reproduction of recorded media (80.6→70.4, down 10.2 points) and chemicals and chemical products (82.2→75.2, down 7.0 points), posted declines compared to the previous month. In the non-manufacturing sector, construction (72.5→73.1) rose by 0.6 points from the previous month, and services (72.7→73.5) increased by 0.8 points from the previous month.

By item across all industries, financial conditions (74.9→75.1) improved from the previous month, while exports (95.6→81.6), ▲domestic sales (75.8→74.3), ▲and operating profit (73.4→71.9) all declined from the previous month. Employment level, which is a counter-cyclical indicator (96.2→96.0), is expected to improve compared to the previous month.

Comparing the SBHI for May this year with the average SBHI for the same month over the past three years, raw materials in the manufacturing sector are expected to improve, while other items are projected to deteriorate compared to the previous three-year average. In the non-manufacturing sector, employment is expected to improve, while other items are projected to deteriorate compared to the previous three-year average.

The most common management challenge faced by small businesses in April was "sluggish sales (product sales)" at 59.9%. This was followed by rising raw material prices (32.5%), increased labor costs (32.0%), and intensified competition among companies (25.3%).

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