The prolonged impact of the Middle East conflict has led to a sustained contraction in production and employment within small and medium-sized manufacturing industries, data showed.

According to the July issue of the KOSI SME Trends report released by the Korea Small and Medium Business Institute (KOSBI) today (July 30), production in small and medium-sized manufacturing decreased by 3.7% in May compared to the same month last year, driven largely by contractions in the automotive and petroleum refining sectors.

Working days also decreased from 21.5 days to 20.5 days.

Employment in related fields fell by 108,000 to 3.384 million, while employment in small and medium-sized construction dropped by 66,000 to 1.825 million.

However, employment across all small and medium-sized enterprises remained at the same level as the same month last year, totaling 25.738 million, as employment in health and social welfare services and information and communications increased by 179,000 and 41,000, respectively.

In the second quarter of this year, exports by small and medium-sized enterprises rose by 12.7% year-on-year to 33.91 billion dollars.

Despite a slight decrease in working days, the growth momentum continued, buoyed by strong performances in flagship products such as cosmetics (35.0%) and semiconductors (41.3%).

As of May this year, newly established startups recorded 82,293, representing a 10.8% decrease compared to the same month last year.

During the same period, the loan delinquency rate for small and medium-sized enterprises rose by 0.10 percentage points to 1.00%.

As of last month, the consumer price index and producer price index increased by 3.2% and 8.6%, respectively.

The Korea Small and Medium Business Institute explained, "Economic indicators are showing mixed signals, with production in small and medium-sized manufacturing continuing its downward trend while production and exports in small and medium-sized services remain robust," adding that "as inflation and the upward trend in SME loan delinquency rates persist, measures are required to ease cost burdens and enhance the financial soundness of small and medium-sized enterprises."

(Photo: Yonhap News)