A restaurant run by a small-business owner. [Herald DB]
A restaurant run by a small-business owner. [Herald DB]

Small-business owners in Seoul reported improved sentiment and higher average sales in June compared to the previous month. However, average income fell over the same period, suggesting that the nascent recovery in neighborhood commerce has yet to translate into meaningful gains in actual operating conditions.

According to the July edition of the "Seoul Alley Economy Trends" report published by the Seoul Credit Guarantee Foundation (Seoul Credit Guarantee), the June alley economy sentiment index snapped a two-month losing streak with a modest rebound. The report provides a comprehensive analysis of the business environment facing Seoul's small-business owners, covering sentiment, sales and income changes, operational difficulties, and financing conditions across industry sector, age group, and years in operation.

The alley economy sentiment index for Seoul small-business owners stood at 93.1 points in June, up 0.3 points from 92.8 points the previous month. The outlook index for July came in at 93.4 points, also 0.3 points above the June reading.

By sector, wholesale and retail posted the largest improvement, with its sentiment index rising 4.0 points from the previous month to 93.3 points. The services sector recorded the highest reading among all sectors at 95.6 points, up 1.2 points. In contrast, the food and beverage and manufacturing and construction sectors each fell 3.0 points, while other industries dropped 1.7 points, reflecting a mixed picture across business categories.

By age group, owners in their 30s and younger posted a sentiment index of 99.3 points, up 3.9 points from the previous month. Among businesses by years in operation, those open between one and three years recorded a reading of 97.6 points, up 1.3 points. July outlook indices for these two groups came in at 99.7 points and 98.1 points, respectively, pointing to continued optimism about a recovery.

Average sales and income moved in opposite directions in June. Average sales per store rose to 20.8 million won ($14,200) from 20.76 million won in May, a gain of 40,000 won, while average income slipped to 3.58 million won from 3.59 million won, a decline of 10,000 won. The divergence between rising sales and falling income suggests that top-line gains have not yet fed through to the bottom line for small-business owners.

Meanwhile, Seoul Credit Guarantee is supporting small-business owners struggling to improve their financial performance through low-interest, long-term business financing and stage-by-stage management improvement programs. The foundation is also running the "Seoul-type Fresh Start Project," designed to help owners who have closed a business and wish to start over.

"We plan to continue using real-time field data to quickly identify business trends and operational difficulties facing small-business owners, and to actively provide support to address the challenges they face on the ground," said Park Jae-yong, executive director of the management strategy division at Seoul Credit Guarantee.


ikson@heraldcorp.com