November SBHI falls 1.8 points to 81.5

Manufacturing at 85.7, non-manufacturing at 79.5 — both down

Exports, operating profit, domestic sales outlooks all deteriorate

More than half of SMEs cite sluggish sales as top concern

An aluminum manufacturing factory in Hwaseong, Gyeonggi Province. [Korea Federation of SMEs]
An aluminum manufacturing factory in Hwaseong, Gyeonggi Province. [Korea Federation of SMEs]

Small and medium-sized enterprises are growing more pessimistic about November business conditions, with the outlook index falling from the previous month. Both manufacturing and non-manufacturing sectors posted declines, and forecasts for exports, domestic sales and operating profit all worsened.

The Korea Federation of SMEs said Thursday that its Small Business Health Index for November — a measure of SME business sentiment — came in at 81.5, down 1.8 points from October. The figure is based on a survey of 3,076 small and medium-sized enterprises conducted from Oct. 14 to 20.

The SBHI is an indicator of SME business expectations. A reading above 100 means more companies expect conditions to improve than to worsen; a reading below 100 signals the opposite.

By sector, the manufacturing SBHI for November stood at 85.7, down 1.6 points from the previous month. Non-manufacturing fell 1.9 points to 79.5. Within non-manufacturing, construction dropped 0.5 points to 69.3 and the service sector fell 2.1 points to 81.6.

Within manufacturing, nine industries saw their outlooks improve — among them printing and reproduction of recorded media, which rose 16.3 points from 63.5 to 79.8, and apparel, clothing accessories and fur products, which gained 8.3 points from 88.3 to 96.6.

On the other hand, 14 industries posted deteriorating outlooks. Medical substances and pharmaceuticals fell 10.7 points from 95.0 to 84.3, while industrial machinery and equipment repair dropped 9.7 points from 89.1 to 79.4.

In non-manufacturing, professional, scientific and technical services rose 3.5 points from 85.7 to 89.2, and repair and other personal services gained 2.7 points from 84.9 to 87.6. Arts, sports and leisure-related services fell 17.7 points from 100.1 to 82.4, and accommodation and food service dropped 4.9 points from 88.2 to 83.3.

Among individual business indicators, the export outlook recorded the steepest decline, falling 5.5 points from 92.0 to 86.5. Operating profit slipped 1.7 points from 80.5 to 78.8, and domestic sales eased 1.2 points from 82.7 to 81.5. The financial conditions index held steady at 80.9, unchanged from the previous month.

The employment level outlook index rose from 94.8 to 96.3. Unlike the general business outlook index, the employment index is an inverse indicator — a higher reading signals worsening hiring conditions.

The steeper drop in the export outlook compared with domestic sales and operating profit stands out against an already broadly subdued picture. Particularly notable is that both manufacturing and non-manufacturing remain below the 100 threshold, meaning companies expecting deterioration continue to outnumber those expecting improvement.

The biggest operational challenge SMEs reported was sluggish sales. In the October survey on business difficulties, 51.5 percent of respondents cited poor product sales as their top concern, followed by rising raw materials prices at 37.3 percent, intensifying competition among businesses at 30.3 percent and rising labor costs at 28.8 percent.

Meanwhile, the average factory utilization rate among small and medium-sized manufacturers in September rose 0.8 percentage points from the previous month to 75.4 percent.

By company size, the average utilization rate at small enterprises climbed from 70.6 percent to 71.4 percent, while medium-sized enterprises rose from 76.9 percent to 77.7 percent — both up 0.8 percentage points.

By company type, general manufacturers saw their rate rise 0.9 percentage points from 74.3 percent to 75.2 percent, while innovation-type manufacturers gained 0.6 percentage points from 75.3 percent to 75.9 percent.


boo@heraldcorp.com