Small and midsize business conditions showed different trends across manufacturing, services, and exports. Manufacturing output fell, but service-sector output and exports kept rising. With inflation and loan arrears rates continuing to climb, some said support is needed to reduce small and midsize businesses' expense burdens and strengthen financial soundness.
According to the July 2026 issue of "KOSI small and midsize business trends," which the Korea SMEs & Startups Institute (KOSI) released on the 30th, small manufacturing output in May fell 3.7% from a year earlier.
The number of working days fell by one day, from 21.5 days in May last year to 20.5 days this year, and output in automobiles and petroleum refining was sluggish. Small manufacturing output declined 1.0% in April and extended its slide for a second month.
Services showed a relatively favorable trend. Small service-sector output rose 2.2% from the same month last year, helped by growth in professional, scientific and technical services and information and communications. It increased 4.1% in March and 3.9% in April, marking a third straight month of gains.
Domestic consumption also showed improvement. Retail sales in May were 58.2 trillion won, up 3.1 trillion won (5.6%) from a year earlier.
By item, semi-durable and non-durable goods sales rose 10.6% and 6.9%, respectively. In contrast, durable goods sales fell 1.2% amid weak passenger car sales.
Employment diverged by enterprise size. In June, employment at enterprises with fewer than 300 employees was 25,738,000, holding at the same level as a year earlier.
Among them, employment at 1–4 person enterprises was 10,214,000, up 216,000, while employment at 5–299 person enterprises was 15,524,000, down by the same amount.
By industry, employment in health and social welfare services and information and communications increased by 179,000 and 41,000, respectively. Manufacturing and construction fell by 108,000 and 66,000, respectively.
Small and midsize business exports maintained a solid uptrend in June. Exports in the second quarter were $33.91 billion, up 12.7% from the same period last year.
Although the number of working days slipped slightly from 67.5 days in the second quarter last year to 67 days this year, cosmetics and semiconductor exports rose 35.0% and 41.3%, respectively, lifting overall export performance.
KOSI said, "While small manufacturing output continues to decline, small service-sector output and exports remain strong, leading to mixed economic indicators," adding, "With inflation continuing to rise and small and midsize business loan arrears rates also trending higher, measures are needed to ease small and midsize businesses' expense burdens and to enhance financial soundness."