The business sentiment for May as felt by small and midsize enterprises worsened from the previous month, falling for a second straight month.
The Korea Federation of Small and Medium Enterprises announced on the 29th the results of the "May 2026 SME business outlook survey," conducted on 3,131 small and midsize enterprises from Apr. 14 to 20.
The May outlook index for business conditions (SBHI) was 77.6, down 3.2 points (p) from the previous month. After falling 1.7 p in April, the outlook declined for the second consecutive month.
The SME business outlook index quantifies survey results on the economy and business conditions as perceived by small and midsize enterprises. A reading above 100 indicates more positive outlooks, while a reading below 100 indicates more negative outlooks.
By industry, the outlook worsened in both manufacturing and non-manufacturing. The May business outlook index for manufacturing was 78.5, down 2.2 p from the previous month, and non-manufacturing was 77.3, down 3.5 p. Within non-manufacturing, construction rose 0.8 p to 69.6, but services fell 4.4 p to 78.8.
In manufacturing, six industries, including nonmetallic mineral products and beverages, rose from the previous month. In contrast, 17 industries, including electronic components, computers, video, audio and telecommunications equipment, and medical substances and pharmaceuticals, declined.
In non-manufacturing, construction edged up, but services were generally weak. Within services, some sectors such as accommodation and food service, and arts, sports and leisure-related services rose, but seven sectors, including transportation and real estate, declined.
Across all industries by item, outlooks for exports, operating profit, funding conditions and domestic sales all fell from the previous month. Employment, however, was expected to improve slightly.
The main management difficulties facing small and midsize enterprises were led by "weak sales" at 52.6%, followed by rising raw material prices (46.1%), rising labor costs (27.4%) and intensified competition among firms (25.8%).
Meanwhile, the average operating rate of small manufacturers in March was 75.4%, up 1.8 percentage points from the previous month.