Micro-business BSI hits 60.6 in August, down 11.7 points from a year earlier
Traditional markets fall 18.6 points; restaurants and retail drag
SME loan delinquency rate climbs to 0.91%, up 0.09 percentage points in a month
Small and medium-sized enterprise production continues to grow, but business conditions felt by micro-business owners and traditional market vendors have worsened, a new report shows. With inflation persisting and SME loan delinquency rates rising again, analysts warn that cost and financing pressures on small operators could intensify.
According to the "KOSI SME Trends — September 2026" report released Monday by the Korea SME and Startups Institute, the business survey index for micro-businesses stood at 60.6 in August, down 11.7 points from the same month a year earlier. Sentiment fell across all major sectors — restaurants dropped 19.4 points, retail fell 18.2 points, professional and technology services slid 13.9 points, personal services declined 10.1 points, and education services fell 8.4 points.
Conditions at traditional markets were even worse. The BSI for traditional markets came in at 57.0 in August, down 18.6 points from a year earlier. Household goods led the decline, falling 30.3 points, followed by clothing and footwear (down 25.1 points), livestock products (down 24.9 points), agricultural products (down 19.4 points), seafood (down 19.2 points) and restaurants (down 16.1 points). A BSI reading above 100 indicates that more respondents see conditions improving than worsening; a reading below 100 indicates the opposite.
Production and consumption indicators held positive but lost momentum. SME manufacturing output rose 0.8 percent in July from a year earlier, driven by automobiles and machinery, though the growth rate slowed sharply from 3.3 percent the previous month. SME services output also grew 1.3 percent, well below the prior month's 3.6 percent gain, as growth in wholesale and retail trade and in accommodation and food services moderated.
Domestic demand followed a similar pattern. Retail sales totaled 56.2 trillion won ($41.3 billion) in July, up 1.4 trillion won, or 2.6 percent, from a year earlier. That increase was far smaller than the year-on-year gains of 3 trillion won in May and 4.3 trillion won in June.
The delinquency rate rose. The SME loan delinquency rate stood at 0.91 percent at the end of July, up 0.09 percentage points from the previous month. The outstanding balance of SME loans in August rose 4.8 trillion won from the prior month to 1,101.6 trillion won.
Employment grew in headline terms but showed a clear divide by firm size. The number of workers at businesses with fewer than 300 employees reached 25.728 million in August, up 129,000 from a year earlier. Within that figure, employment at firms with one to four workers rose by 189,000, while employment at firms with five to 299 workers fell by 61,000. Manufacturing and accommodation and food services each shed 73,000 jobs.
The startup market also contracted. The number of newly registered businesses fell 9.3 percent in July from a year earlier to 93,516. Declines were recorded across services (down 9.8 percent), manufacturing (down 8.6 percent) and construction (down 3.5 percent), and startup activity dropped in every age group — those under 30 fell 11.6 percent, those in their 30s fell 11.0 percent and those in their 50s fell 9.2 percent. Technology-based startups were the lone bright spot, rising 5.8 percent to 21,043.
Forward-looking indicators were more upbeat. The September outlook BSI for micro-businesses rose 6.8 points from a year earlier to 95.1, while the outlook BSI for traditional markets climbed 19.5 points to 105.0 — crossing the 100 threshold for the first time in three years. The SME outlook index also gained 4.5 points to 84.8. Analysts attributed the improvement to expectations of a holiday-season boost ahead of Chuseok, even as current conditions remain weak.
The institute said it was concerned that "rising prices and the renewed increase in the SME loan delinquency rate will add to cost and financing burdens." It called for efforts to ease those pressures on micro-businesses and SMEs so that "holiday-driven optimism translates into a genuine recovery in sales."
boo@heraldcorp.com
