SME business outlook index falls to 83.3 in October as non-manufacturing drags

Small and medium-sized enterprises' business outlook for October worsened from a month earlier, as a slight improvement in manufacturing failed to offset a broader decline in non-manufacturing sectors led by services. Expectations across key business indicators — exports, domestic sales, operating profit and cash flow — all fell.

According to the Korea Federation of SMEs' "October 2026 SME Business Outlook Survey," conducted Sept. 10–16 among 3,073 small and medium-sized enterprises, the Small Business Health Index for October came in at 83.3, down 1.5 points from the previous month.

An SBHI above 100 means more companies hold a positive outlook than a negative one, while a reading below 100 indicates the opposite. The October figure confirms that pessimism continues to dominate among SMEs.

Trends diverged by sector. The manufacturing SBHI rose 0.2 points from the previous month to 87.3, while the non-manufacturing index fell 2.3 points to 81.4.

Within manufacturing, the furniture sector jumped 14.3 points to 79.8 from 65.5, and industrial machinery and equipment repair rose 12.9 points to 89.1 from 76.2. Nine of the 23 manufacturing subsectors posted gains.

The beverage sector, however, tumbled 31.7 points to 75.8 from 107.5, and printing and recorded media reproduction fell 8.9 points to 63.5 from 72.4. Fourteen subsectors saw their outlook indexes decline.

In non-manufacturing, the construction sector's SBHI rose 4.1 points to 69.8 from 65.7, but still remained below 70. The services index fell 3.6 points to 83.7 from 87.3.

Within services, transportation rose 9.2 points to 91.9 from 82.7, and arts, sports and leisure-related services climbed 6.4 points to 100.1 from 93.7. Education services fell 6.0 points to 84.9 from 90.9, and wholesale and retail trade dropped 5.4 points to 80.7 from 86.1.

Sub-indexes also weakened across the board. The exports outlook index fell to 92.0 from 94.2, and the domestic sales index slipped to 82.7 from 83.8. The operating profit index edged down to 80.5 from 81.5, and the cash flow index fell to 80.9 from 81.8. The employment outlook index, an inverse indicator, held steady at 94.8, unchanged from the previous month.

The biggest burden SMEs reported in actual operations was sluggish sales. In a survey on business difficulties in September, 54.7 percent of respondents cited weak product sales as their top concern. Rising raw materials prices followed at 38.8 percent, intensifying competition among businesses at 33.5 percent, and rising labor costs at 28.2 percent.

Conditions on the production floor also deteriorated. The average operation rate for small and medium-sized manufacturers in August fell 0.6 percentage points from the previous month to 74.6 percent.

By company size, the average operation rate for small enterprises slipped 0.6 percentage points to 70.6 percent from 71.2 percent, while medium-sized enterprises fell 0.7 percentage points to 76.9 percent from 77.6 percent. By company type, general manufacturers dropped 0.9 percentage points to 74.3 percent from 75.2 percent, while innovation-oriented manufacturers held steady at 75.3 percent.