Optimism among South Korea's small and medium-sized enterprises weakened after two straight months of improvement.
The Korea Federation of SMEs (KBIZ) said on the 29th that its Small Business Health Index (SBHI) for October stood at 83.3, down 1.5 points from the previous month. The survey covered 3,073 small and medium-sized companies. The index had climbed from 78.2 in July to 80.0 in August and 84.8 in September before turning lower this month.
A reading above 100 means more companies expect business conditions to improve than to worsen, while a reading below 100 indicates the opposite.
The manufacturing index rose 0.2 point from a month earlier to 87.3. By sector, furniture posted the largest gain, climbing 14.3 points to 79.8 in October from 65.5 in September, followed by repair of industrial machinery and equipment, which rose 12.9 points to 89.1 from 76.2. A total of nine sectors improved from the previous month. Fourteen sectors declined, including beverages, which fell to 75.8 from 107.5, and printing and reproduction of recorded media, down to 63.5 from 72.4.
The non-manufacturing index came in at 81.4 for October, down 2.3 points from September. Construction rose 4.1 points to 69.8 from 65.7, while services fell 3.6 points to 83.7 from 87.3.
Across all industries, every component of the outlook weakened from September. Exports slipped to 92.0 from 94.2, domestic sales to 82.7 from 83.8, operating profit to 80.5 from 81.5 and funding conditions to 80.9 from 81.8.
Asked about their biggest business difficulties in September, 54.7% of respondents cited weak sales, the most common answer. Rising raw material prices followed at 38.8%, along with intensifying competition among companies at 33.5% and higher labor costs at 28.2%. The average capacity utilization rate at small manufacturers was 74.6% in August, down 0.6 percentage point from the previous month.
