SME Production and Consumption Recover, but Small Business Sentiment Worsens

KOSI Releases August Issue of "KOSI SME Trends"

While major economic indicators such as SME production have shown improvement, the business sentiment among small business owners has actually deteriorated.

The Korea Small Business Institute (KOSI) announced the release of its August 2026 issue of "KOSI SME Trends" on the 28th, which included these findings.

In June this year, production in small and medium-sized manufacturing enterprises increased by 3.4% compared to the same month last year, marking a turnaround to growth. This increase was mainly driven by sectors such as automobiles and machinery, thanks to the normalization of supply for auto parts companies. Production in small and medium-sized service industries also rose by 3.8%, especially in wholesale and retail, due to improved consumer sentiment and domestic demand.

Consumption indicators also improved. In June, retail sales rose by 8.4% year-on-year to 57.8 trillion won. Sales of durable goods (up 14.0%), non-durable goods (up 6.8%), and semi-durable goods (up 5.0%) all increased.

Containers are piled up at Sinsundae Pier in Busan Port. Photo by Yonhap News.

Employment trends diverged by business size. In July, the number of people employed at workplaces with fewer than 300 employees stood at 25,692,000, an increase of 43,000 from the same month last year. By size, businesses with 1 to 4 employees saw an increase of 210,000, while those with 5 to 299 employees saw a decrease of 166,000. By sector, there were increases in health and social welfare services (up 149,000) and information and communications (up 23,000), but declines in manufacturing (down 86,000) and construction (down 57,000).

The number of newly established companies in June was 93,195, a 1.0% decrease from the same month last year. By industry, construction increased by 1.1%, but the service industry fell by 1.5% and manufacturing by 0.3%. By age group, there were increases among those in their 50s (up 1.4%) and those aged 60 and above (up 1.5%), but decreases among those in their 30s (down 3.0%) and 40s (down 2.9%). However, the number of startups in technology-based industries rose by 15.8% year-on-year to 20,414.

Despite improvements in key indicators such as SME production and consumption, the business sentiment among small business owners deteriorated. The Business Survey Index (BSI) for small business owners fell by 5.9 points to 55.6 compared to the same month last year. In the August outlook, the BSI forecast for small business owners dropped by 5.7 points to 71.0, while for traditional markets it fell by 6.5 points to 66.5.

An official from KOSI stated, "Continuous measures are needed to reduce burdens such as energy costs in order to help restore business sentiment among small business owners."

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