More Than Half of SMEs Still Sigh Despite Improved Business Outlook

[Financial News] The business outlook for small and medium-sized enterprises improved for a second straight month, but more than half of companies still complained of weak sales.
According to the "August 2026 SME Business Outlook Survey" released on the 30th by Korea Federation of SMEs (KBIZ), the business survey index for August, or SBHI, rose 1.8 points from the previous month to 80.0. An SBHI reading above 100 means more companies expect business conditions to improve than to worsen, while a reading below 100 indicates the opposite.
The survey was conducted from Aug. 14 to 21 among 3,063 SMEs.
By sector, manufacturing and nonmanufacturing showed different trends. The August outlook index for manufacturing fell 2.4 points from the previous month to 80.1, while the nonmanufacturing index rose 3.7 points to 80.0.
Among nonmanufacturing industries, construction rose from 70.3 to 71.1. Services climbed from 77.5 to 81.8, leading the overall improvement in the outlook.
In manufacturing, industrial machinery and equipment repair (84.1 to 91.0) and leather bags and shoes (77.2 to 82.6) posted gains, but 17 industries, including textile products (77.9 to 66.2) and medical substances and pharmaceuticals (90.1 to 82.1), declined from the previous month.
In services, real estate (75.2 to 90.5) and wholesale and retail trade (73.0 to 78.9) saw the largest increases. By contrast, arts, sports and leisure services (78.3 to 70.9) and repair and other personal services (81.9 to 76.5) fell.
While the outlook is improving, conditions on the ground remain difficult.
The biggest management difficulty for SMEs in July was weak sales of products and services, cited by 50.7% of respondents. It was followed by rising raw material prices at 41.1%, intensified competition among companies at 27.9%, and higher labor costs at 24.7%.
By category, the outlook for operating profit rose from 74.6 to 77.6, cash flow improved from 77.0 to 79.9, and domestic sales increased from 78.2 to 79.7.
Export expectations, however, edged down from 87.8 to 87.3. Employment outlook, an inverse indicator, fell from 96.3 to 95.5, suggesting improvement from the previous month.
The average operating rate for small and medium-sized manufacturers in June stood at 75.9%, up 0.5 percentage point from the previous month. By company size, small firms rose 0.2 point to 71.6%, while medium-sized firms increased 0.7 point to 78.4%.
By company type, general manufacturers rose 0.8 point to 76.0%, while innovative manufacturers slipped 0.1 point to 75.6%.
A KBIZ official explained, "The August outlook improved mainly in services, but manufacturing still showed weakness," adding, "Companies continue to cite weak sales as their biggest management difficulty, indicating that sentiment has yet to recover."

[email protected] Kim Hyun-chul Reporter