The business outlook for small and midsize enterprises in March improved slightly. Expectations for exports and domestic demand revived, but prospects for financing conditions and operating profit worsened. It is a "mixed signal," with funding pressure persisting amid a rebound in sentiment.
The Korea Federation of Small and Medium Enterprises announced the results of the "March 2026 SME Business Outlook Survey" on the 26th.
The Small Business Health Index (SBHI) for the March business outlook came in at 82.5, up 3.0 points from the previous month. However, the index still remains below the baseline of 100. This means positive responses are fewer than negative ones.
The survey was conducted on 3,150 SMEs nationwide on the 9th to 13th, with 2,908 responding.
By industry, the rebound in manufacturing stood out. The manufacturing SBHI rose 7.2 points from the previous month to 88.1. Nonmanufacturing rose only 1.2 points to 80.0.
Among nonmanufacturing sectors, construction rose 3.3 points to 70.3. Services increased 0.7 points to 81.9. Within manufacturing, industrial machinery and equipment repair (72.2→97.2) and rubber and plastic products (66.1→86.6) improved sharply. In contrast, furniture (88.3→81.1) and beverages (94.0→87.2) declined.
In services, arts, sports and leisure services jumped 11.3 points (73.8→85.1), and repair and other personal services also rose (80.1→82.8). Accommodation and food service edged down (84.1→82.2).
By item, the divergence is clearer. The export outlook climbed 6.4 points from 79.6 to 86.0. Domestic sales also rose from 80.4 to 82.0. However, operating profit fell 1.4 points from 78.8 to 77.4, and financing conditions dropped 2.6 points from 82.9 to 80.3.
The employment level index was 97.4, up 0.3 points from the previous month. Employment indicators are a "counter-series," falling during expansion and rising during contraction against the 100 baseline. The increase suggests employment conditions could worsen.
Compared with the three-year average for the same month, most items in manufacturing were expected to improve except for facilities, inventory and employment. In nonmanufacturing, all items except exports and employment were found to exceed the three-year average.
The biggest management difficulty was "sluggish sales (product sales)" at 55.7%. It was followed by rising labor costs (36.6%), intensifying competition among firms (32.1%), and higher raw material prices (30.4%). Multiple responses were allowed.
Meanwhile, the average operating rate of small and midsize manufacturers in January was 73.8%, down 1.7 percentage points from the previous month. It is higher than the long-term average (71.9%) but slid from the previous month (75.5%). The operating rate of small firms fell 3.2 percentage points from 72.3% to 69.1%, and midsize firms slipped 0.8 percentage points from 77.4% to 76.6%.