20 June 2017
HKTDC Export Index 2Q17: Exporters Confidence Improves
- Exporters have become cautiously optimistic with regard to Hong Kong’s export performance, with the HKTDC Export Index rising from 47.1 in 1Q17 to a 16-quarter high of 50.1 in 2Q17.
- With regard to performance by industry, all sectors, with the exception of the jewellery sector, reported higher readings in 2Q17. The export indices for electronics, toys, timepieces and machinery exceeded the watershed mark of 50, indicating a positive export performance outlook among these industries over the short-term.
- Mainland China outperformed the US and Japan to be seen as the most promising market in 2Q17 (51.9). The index for the EU rose slightly to 49.6, while declines in export confidence were recorded for Japan and the US.
- The Trade Value Index edged up to 51.1 in 2Q17, indicating the likelihood of higher unit prices in the near term. While the procurement sentiment improved, the index remained slightly below 50 for 2Q17.
- On the supply side, the labour cost pressure on the Chinese mainland remained a concern. Overall, 54% of respondents experienced higher labour costs on the mainland during 2Q17, compared with 47% in 1Q17 and 48% in 4Q16.
The overall HKTDC Export Index climbed to 50.1 for 2Q17, a 16-quarter high and a rise from 47.1 in 1Q17. This change of confidence level from negative to positive indicated a reversal in sentiment with regard to export performance in 2Q17. Overall, exporters have become cautiously optimistic with regard to their likely export performance over the short-term.
Except for the jewellery sector, all industries reported a higher reading for 2Q17 than in the previous quarter. The export indices for timepieces, toys, machinery and electronics exceeded the watershed mark of 50, reflecting a positive export performance outlook over the short-term. Overall, the timepieces sector outperformed all other industries. Its index for 2Q17 (54) was not only the highest among the major industries, but it also showed the largest increase from its 1Q17 figure (41.7). The jewellery sector, however, swam against the tide and appeared the most pessimistic.
With regard to confidence in the overseas markets, the Chinese mainland outperformed the US and Japan to be deemed the most promising of the major markets in 2Q17. Overall, the index for the Chinese mainland edged up to 51.9, reaching expansionary territory in 2Q17, from 49.5 in 1Q17. While the index for the EU rose slightly, it remained a touch below 50. By contrast, declines in confidence were recorded with regard to both Japan and the US.
The Offshore Trade Index rose to 41.5 in 2Q17, increasing from 33 in 1Q17. This indicated an improvement in export confidence with regard to offshore trade performance (i.e. those shipments not passing through Hong Kong, but handled by Hong Kong exporters). Yet with a lower reading than the HKTDC Export Index overall, Hong Kong’s offshore trade is expected to underperform Hong Kong’s total exports in the near term.
The Trade Value Index inched up to 51.1 in 2Q17, rising from 48 in 1Q17. Except in the cases of jewellery and machinery, all of the major industries reported higher readings for 2Q17. The index for timepieces increased slightly to 54.5, the highest among the major industries. The indices for clothing and jewellery, however, stayed below 50, signalling lower unit prices in the near term.
The Procurement Index rose to 49 in 2Q17, rising from 41.8 in 1Q17, reflecting an improved procurement sentiment. The procurement indices for all of the major industries rose in 2Q17, with clothing, toys, timepieces and machinery reaching an expansionary level. For electronics and jewellery, however, readings below the watershed mark of 50 indicated the possibility of a fall in input costs and/or sluggish future demand in these industries.
The Employment Index increased slightly, rising to 48.6 in 2Q17, from 47.1 in 1Q17. Hiring confidence was stronger in the machinery sector, which, with a reading of 51.9, recorded the highest figure among the major industries, while electronics and timepieces also showed signs of improvement. With the exception of the machinery sector, however, the indices for the other major industries remained below 50, signalling the likelihood of labour contraction in the near term.