SME Business Conditions Worse in February... Economic Outlook Index at 67.5

Average Operating Rate of Small and Medium Manufacturing Enterprises Rises by 0.4 Percentage Points in December Compared to Previous Month

The Small and Medium Business Sentiment Index (SBHI) for February fell by 0.6 points compared to the previous month, marking a decline for the fourth consecutive month.

The Korea Federation of SMEs announced the results of the "February 2025 Small and Medium Business Sentiment Survey" on the 30th. This survey was conducted from the 13th to the 17th of the month, targeting 3,070 small and medium enterprises. An index above 100 indicates that more companies have a positive outlook on the economy than those with a negative outlook, while an index below 100 indicates the opposite.

The business outlook sentiment index for February was 67.5, down 0.6 points from the previous month. Compared to the same month last year (75.4), it fell by 7.9 points. The manufacturing sector's February business outlook rose by 1.2 points from the previous month to 75.2, whereas the non-manufacturing sector declined by 1.3 points to 64.2.

Within manufacturing, 11 industries, centered on metal fabricated products, showed an increase compared to the previous month, while 12 industries, including beverages and textiles, declined. In the non-manufacturing sector, construction rose by 0.9 points from the previous month, while the service industry fell by 1.8 points.

Looking at the outlook by industry category, domestic sales (67.4→68.0) rose compared to the previous month, while exports (85.4→83.1), financial conditions (70.5→68.7), and operating profits (68.2→67.5) declined. Employment (95.4→96.2), which follows a reverse trend, is expected to worsen compared to the previous month.

Comparing February's SBHI with the average SBHI for the same month over the past three years by category, raw materials in manufacturing are expected to improve, while other categories are forecasted to worsen compared to the previous three-year average. In non-manufacturing, exports are expected to improve, but other categories are forecasted to deteriorate compared to the previous three-year average.

In January, the biggest management difficulty for small and medium enterprises was sluggish sales (product sales) at 51.4%, followed by rising labor costs (36.0%), rising raw material prices (30.5%), and intensified competition among companies (24.3%).

The average operating rate of small and medium manufacturing enterprises in December was 72.6%, up 0.4 percentage points from the previous month and 0.2 percentage points higher than the same month last year.