The business outlook of South Korea's smaller firms inched up for December on eased social distancing measures and hopes of higher year-end domestic demand, a poll showed Monday.

The survey of 3,150 small and medium-sized enterprises (SMEs) showed that the small business health index amounted to 83.5 for the coming month, up 2 points from November.

It marks a turnaround from November's decrease that came after the second straight month of increase, but the reading remains below par.

A reading below 100 indicates pessimists outnumber optimists. The survey was taken by the Korea Federation of SMEs from Nov. 15-23.

The federation said the improvement reflects expectations of a faster economic recovery following the country's implementation of eased social distancing rules under the "living with COVID-19" scheme early this month to bring the country gradually back to pre-pandemic normalcy amid high vaccination rates.

Smaller companies also expect domestic demand to be brisk at the end of the year, it added.

According to the findings, the index for the manufacturing sector stood at 86.4 for December, up 0.6 point from November, with that for non-manufacturing companies rising 2.7 points to 82.

Nearly 58 percent of the respondents cited weak domestic demand as the biggest hurdle to their management, followed by rising raw materials costs with 44.8 percent, growing labor costs with 42 percent and cutthroat competition with 41.3 percent. (Yonhap)