SME business sentiment has recovered, but outlook index still remains below 100

[Financial News] Expectations for a recovery in small and medium-sized businesses improved for a second consecutive month. The business outlook index for September rose mainly on stronger manufacturing sentiment, while forecasts for exports and domestic demand also improved across the board. However, the outlook index still remained below the benchmark of 100. According to a survey released on the 30th by KBIZ of 3,060 SMEs, the September SBHI for business conditions stood at 84.8, up 4.8 points from the previous month. It followed gains from 78.2 in July to 80.0 in August, marking two straight months of increases.
An SBHI reading of 100 or higher means more companies expect business conditions to improve than those that do not. A reading below 100 indicates the opposite.
By sector, manufacturing posted the largest improvement. The manufacturing outlook index rose 7.0 points from the previous month to 87.1. The non-manufacturing index increased 3.7 points to 83.7.
In manufacturing, 19 of the 23 surveyed industries saw improved business outlooks from a month earlier. The outlook for nonmetallic mineral products rose 17.2 points from 64.0 to 81.2, while beverages climbed 16.0 points from 91.5 to 107.5.
By contrast, industrial machinery and equipment repair fell 14.8 points from 91.0 to 76.2, and leather, bags and shoes dropped 7.6 points from 82.6 to 75.0.
In non-manufacturing, the service sector outlook index rose 5.5 points from 81.8 to 87.3. Construction, however, fell 5.4 points from 71.1 to 65.7.
Within services, arts, sports and leisure services jumped 22.8 points from 70.9 to 93.7, while wholesale and retail also gained 7.2 points from 78.9 to 86.1. Transportation slipped 2.7 points from 85.4 to 82.7, and lodging and restaurants edged down 1.1 points from 87.4 to 86.3.
Detailed forecasts for exports and domestic demand also improved. The September export outlook index rose 6.9 points from the previous month to 94.2. Domestic sales increased 4.1 points from 79.7 to 83.8. Operating profit climbed 3.9 points from 77.6 to 81.5, while cash flow conditions improved 1.9 points from 79.9 to 81.8.
The employment level index, a reverse indicator, fell from 95.5 to 94.8, suggesting an improvement from the previous month.
In a survey of SMEs' management difficulties in August, the most common response was weak sales and sluggish product demand, cited by 52.4% of respondents. It was followed by rising raw material prices at 41.0%, intensified competition among companies at 31.4%, and higher labor costs at 27.8%.
[email protected] Kang Jung-mo Reporter