January Small and Medium Manufacturing and Service Industry Production Decline... "Impact of Main Industry Weakness"

March Issue of KOSI Small Business Trends Released

In January of this year, production in both small and medium-sized manufacturing and service industries decreased compared to the same month last year. In particular, manufacturing saw a significant decline due to a reduction in operating days caused by the holiday season and sluggish performance in key sectors such as electronic components and machinery equipment.

According to the March issue of 'KOSI Small Business Trends' released on the 28th by the Small and Medium Business Research Institute (SMBRI), small and medium-sized manufacturing production in January this year fell by 10.8% compared to the same month last year. During the same period, large-scale manufacturing production decreased by 2.2%, highlighting the particularly poor performance of small and medium-sized enterprises. This is analyzed to be due to a decrease in operating days (-4.0 days) and sluggishness in key industries.

In January this year, small and medium-sized service industry production increased in sectors such as health and social welfare but declined in wholesale and retail, accommodation, and food services, resulting in a 0.8% decrease. Large enterprises also saw a 0.4% decrease during the same period.

Retail sales in January this year reached 53.3 trillion won, increasing by 2.2% compared to the same month last year, driven by an increase in non-durable goods due to the Lunar New Year holiday. By business type, sales decreased in non-store retail (-2.2%) and passenger car and fuel retail stores (-1.2%), but increased in large supermarkets (18.8%) and department stores (7.4%), resulting in an overall increase.

The number of employees in small and medium-sized enterprises in February this year was 24,948,000, a decrease of 11,000 compared to the same month last year. By size, the number of employees in companies with 1-4 employees increased by 41,000 compared to the same month last year, while companies with 5-299 employees decreased by 52,000. The number of regular workers (62,000) and temporary workers (61,000) in small and medium-sized enterprises showed a slowdown in growth, while daily workers (-93,000) continued to decline.

The number of start-up companies in January this year was 88,478, a 27% decrease compared to the same month last year due to a reduction in registration days and economic downturn. By industry, major sectors such as manufacturing (-26.3%), service (-27.1%), and construction (-25.4%) saw significant declines. The number of technology-based start-ups recorded 17,956, a 20.1% decrease compared to the same month last year, mainly in knowledge-based service industries (-18.8%).

The SMBRI stated, "Recently, production activities of small and medium-sized enterprises have decreased in both manufacturing and service sectors due to a reduction in operating days and economic downturn," and analyzed, "Although retail sales contraction was alleviated by temporary factors such as the Lunar New Year holiday, sluggishness continues due to high interest rate trends and weakened consumer sentiment." They added, "Policy authorities need to promptly respond to economic instability factors and promote consumption stimulation policies for small and medium-sized enterprises and small business owners to revitalize the domestic economy."