15 June 2016
HKTDC Export Index 2Q16: Confidence Stabilises Among Hong Kong Exporters
The HKTDC Export Index monitors the current export performance of Hong Kong traders and gauges their near-term prospects.
- The HKTDC Export Index was virtually stable in 2Q16 at 37.2, although performance varied considerably across the different industries.
- With both their indices rebounding to above 40 in 2Q16, exporters in the machinery and toy sectors outperformed the other sectors. These two industries also reported the highest procurement indices.
- Faring less well, jewellery exporters are clearly facing strong headwinds. The index for jewellery fell to 21.6, its lowest level since 2Q09. Its procurement index has now dropped for three consecutive quarters, falling to an historic low of 16.7.
- Exporter confidence with regard to the major markets has remained steady. Of particular note, Japan maintained the highest reading in 2Q16 (47.4).
- Respondents also reported a persistent labour cost pressure on the mainland – 53% of respondents experienced higher labour costs on the mainland during 2Q16, compared with 53% in 1Q16 and 50% in 4Q15.
The overall HKTDC Export Index came in at 37.2 for 2Q16, little changed from 1Q16’s 37.3. While exporter confidence is clearly stabilising, they remain pessimistic with regard to their likely export performance over the short-term.
Performance varied considerably across the different industries. In 2Q16, machinery and toys saw their readings rebound to above 40, while the index for jewellery fell to 21.6, its lowest level since 2Q09. The indices for electronics, clothing and timepieces, though, changed little when compared to the last quarter, staying well below the watershed of 50.
Export confidence with regard to the major markets has remained largely the same as was seen in the last quarter. The index for Japan stood at 47.4 in 2Q16, the highest reading for any of the major markets. Compared with the last quarter, a slightly higher reading was recorded for the Chinese mainland in 2Q16 (45.8). The indices for the US and the EU, however, edged down slightly, falling to 45.8 and 44.3 respectively.
The Offshore Trade Index rebounded to 34.8 in 2Q16, up from 27.3 in 1Q16. This reflects an improved sentiment with regard to Hong Kong exporters’ offshore trade performance (i.e. those shipments not passing through Hong Kong, but handled by Hong Kong exporters). However, with a lower reading than the HKTDC Export Index, Hong Kong’s offshore trade is expected to underperform Hong Kong’s overall exports in the near term.
The Trade Value Index fell only slightly to 40.9 in 2Q16, a similar trajectory as seen in the headline index. All of the major industries posted readings below 50, signalling lower unit prices in the near term, although the readings for machinery, timepieces and electronics were relatively higher. The index for jewellery, however, fell to 30.9 in 2Q16, the lowest among the major industries.
The Procurement Index edged down to 34.3 in 2Q16, falling from 36.3 in 1Q16, reflecting the slightly worse procurement sentiment. This indicates that companies may be expecting a fall in input costs and/or sluggish demand ahead. With readings above 40, machinery and toys saw the highest readings in 2Q16, while the index for jewellery has now dropped for three consecutive quarters, falling to an historic low of 16.7.
The Employment Index edged up to 43.6 in 2Q16, rising from 42.1 in 1Q16. With the exception of the clothing and jewellery sectors, all industries showed slightly higher readings compared to the previous quarter. Hiring confidence was the highest in the toy industry, while jewellery exporters reported the lowest reading (37.3).