Sluggish Alley Economy: Small Business Sales Rise, but Income Falls

Analysis of June Business Sentiment Among Seoul Small Business Owners

Sales Up by 40,000 Won, Average Income Down by 10,000 Won

Rising Operating Costs Drive Decline in Profitability

The average sales of small business owners in Seoul increased slightly last month. However, their average income declined, indicating that more time will be needed before the alley economy in local neighborhoods shifts into a full recovery phase.

According to the 'July Seoul Alley Economy Trend' report released by the Seoul Credit Guarantee Foundation on the 28th, the alley economy sentiment index for June stood at 93.1 points, up by 0.3 points from the previous month (92.8 points), marking the first increase in three months.

This index comprehensively analyzes the business sentiment and changes in sales and income among Seoul's small business owners by industry, age, and business experience, as well as challenges in management and status of capital utilization, offering a multi-faceted assessment of the business environment for small enterprises in the Seoul area.

By industry, the alley economy sentiment index for wholesale and retail reached 93.3 points, the largest improvement as it rose by 4.0 points from the previous month. The service sector recorded the highest index among all industries at 95.6 points, an increase of 1.2 points from the previous month.

For business owners under the age of 30, the sentiment index rose by 3.9 points to 99.3. By business experience, those operating between one and three years saw their sentiment index rise by 1.3 points to 97.6. The outlook for the alley economy in July was also recorded at 93.4 points, 0.3 points higher than the June sentiment index.

However, average sales and income showed diverging trends. The average sales per store in June were 20,800,000 won, an increase of 40,000 won from the previous month (20,760,000 won). In contrast, average income declined by 10,000 won, down to 3,580,000 won from 3,590,000 won the previous month.

By industry, the food service sector saw the largest increase in sales, up 150,000 won from the previous month. In contrast, manufacturing and construction, as well as other sectors, experienced decreases of 40,000 won and 30,000 won respectively, while the service sector remained at the same level as the previous month.

The decline in real income is attributed to rising operating costs. The continued high inflation has caused costs for materials, labor, and rent to increase simultaneously, rapidly deteriorating profit structures. Moreover, there are expectations that economic conditions in the second half of the year will worsen compared to the first half. In a recent business outlook survey conducted by the Korea Federation of SMEs targeting 505 small businesses in local commercial districts, 59.8% responded that overall business conditions would deteriorate in the second half. Furthermore, 63.6% reported that business conditions in the first half of this year were worse compared to the second half of last year.

Jae-Yong Park, Executive Director of Management Strategy at Seoul Credit Guarantee Foundation, said, "We will continue to leverage live on-site data to quickly identify small business owners' economic trends and management challenges, and will proactively expand support to help address their difficulties on the ground."

'July Seoul Neighborhood Economy Trends' Results. Seoul City

This content was produced with the assistance of AI translation services.