SME Manufacturing Output Rises Slightly in March Year-on-Year... Driven by Increased Semiconductor Production

Production in Small and Medium-Sized Service Businesses Up 0.2%
Retail Sales Reach 55.6 Trillion Won, Up 2.8%

In March of this year, production in small and medium-sized manufacturing companies saw a slight increase compared to the same month last year, driven by growth in semiconductor production. Production in small and medium-sized service businesses also rose modestly, mainly due to growth in the health and social welfare service sectors.

On May 27, the Korea Small Business Institute (KOSBI) announced the publication of the May issue of "KOSI SME Trends." According to the report, in March, production in small and medium-sized manufacturing companies increased by 0.3% year-on-year, despite a reduction in the number of working days (-0.5 days) and the impact of simultaneous nationwide wildfires. This growth was attributed to increased semiconductor production. Production in small and medium-sized service businesses also rose slightly by 0.2% year-on-year, mainly due to growth in the health and social welfare service sectors.

During the same period, retail sales amounted to 55.6 trillion won, marking a 2.8% increase. Sales of durable goods (3.9%), semi-durable goods (1.1%), and non-durable goods (2.9%) all rose, with particularly strong growth in products such as passenger cars and pharmaceuticals.

In April, the number of employees in small and medium-sized enterprises reached 25,567,000, an increase of 34,000 compared to the same month last year. By company size, the number of employees in companies with 1 to 4 workers decreased by 73,000, while those in companies with 5 to 299 workers increased by 107,000. However, due to sluggish performance in the manufacturing and construction sectors, employment in these industries continued to decline. Among wage workers in small and medium-sized enterprises, the number of regular employees (+121,000) and temporary employees (+58,000) increased, while the number of daily workers (-63,000) showed a downward trend.

In March, the number of newly established companies was 100,640, a decrease of 4.7% compared to the same month last year. By industry, new business formation declined across major sectors, including manufacturing (-5.2%), services (-4.7%), and construction (-5.0%). However, the number of startups in technology-based industries increased, with knowledge-based service businesses rising by 2.6%, resulting in a total of 19,247, up 1.3% year-on-year.

A KOSBI official stated, "Key economic indicators for small and medium-sized enterprises, such as production and employment, showed only slight increases compared to the same month last year, indicating that economic recovery remains sluggish, while the number of startups has declined year-on-year." The official added, "Moreover, worsening external trade conditions present downside risks for SME economic indicators. Policymakers should continue to monitor the economic situation and seek to revitalize small and medium-sized enterprises and small business owners through policies that stimulate consumption and improve SME productivity."