Mid-Sized Companies' Q3 Business Outlook Index Slightly Declines: "Optimism Remains Elusive"

Business Outlook for Mid-Sized Companies Slightly Declines in Q3
Manufacturing Sector Drops Again While Non-Manufacturing Sees Modest Gain

The business outlook index for mid-sized companies in the third quarter declined slightly compared to the previous quarter. While the manufacturing sector, which had turned upward in the previous quarter, fell again, the non-manufacturing sector saw a modest increase.

The Korea Federation of Middle Market Enterprises announced on July 1 that the third-quarter business outlook index for mid-sized companies recorded 78.0, a decrease of 2.7 points from the previous quarter's 80.7. The survey was conducted from May 26 to June 10, targeting 800 mid-sized companies. An outlook index above 100 indicates that more companies expect the next quarter to be better than the previous one, while a figure below 100 means the opposite.

The business outlook index for the manufacturing sector was 76.9, down 5.7 points from the previous quarter's 82.6. Although the electronic components sector recorded a significant increase of 27.8 points to reach 107.7, declines in sectors such as automobiles (70.7, down 6.1 points) and other manufacturing (67.9, down 32.1 points) led to an overall decrease in the index. The business outlook index for the non-manufacturing sector was 79.2, up 0.4 points from the previous quarter's 78.8. The real estate sector (75.6, up 11.9 points) and the transportation sector (88.5, up 10.5 points) showed particularly strong increases.

The export outlook index for mid-sized companies fell to 91.9, down 5.3 points from the previous quarter's 97.2, as both manufacturing (92.7, down 6.9 points) and non-manufacturing (90.6, down 2.4 points) sectors declined. The domestic demand outlook index was 78.1, up 1.4 points from the previous quarter. The manufacturing sector (76.1, down 0.4 points) declined for the fifth consecutive quarter, but the electronic components sector (109.5) rose by 30.5 points, turning positive for the first time in six quarters. Forecasts for major management indicators such as production, operating profit, and funds generally showed a slight decline compared to the previous quarter.

Lee Hojun, Executive Vice Chairman of the Korea Federation of Middle Market Enterprises, stated, "Despite positive signals such as political stabilization and the KOSPI reaching 3,100, the prolonged domestic and international uncertainties?including U.S. reciprocal tariffs, instability in the Middle East, declining export competitiveness, and sluggish domestic demand?appear to be sustaining negative business sentiment among mid-sized companies." He added, "We will work even more closely with the government and the National Assembly to create an effective policy environment that can promote increased investment and employment by addressing concrete challenges on the ground, such as sluggish domestic demand, rising labor costs, excessive competition among companies, and increasing raw material prices."