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HKTDC Export Index 3Q16: Export Confidence Holds Steady, While Brexit Shows Little Impact on Hong Kong Exports

The HKTDC Export Index monitors the current export performance of Hong Kong traders and gauges their near-term prospects.

  • Hong Kong exporters’ confidence is holding steady, with the HKTDC Export Index edging up slightly to 38.8 in 3Q16.
  • The electronics, jewellery and timepiece industries all reported higher readings for 3Q16, while also demonstrating better procurement sentiment on a quarter-to-quarter basis.
  • With regard to the major markets, export confidence has remained steady. Of particular note, Japan maintained the highest reading in 3Q16 (46.9), followed closely by the US (46.7) and the Chinese mainland (46.1). At 42.4, the EU was the worst performer.
  • In terms of Brexit repercussions, most Hong Kong exporters (nearly 83%) said it had not had any impact on their sales performance to date, although the remaining respondents (17%) reported slightly negative repercussions. Among those affected, 55% had strategies in place to respond, with developing new markets, downsizing and trading down topping the list.
  • Respondents reported persistent but receding labour cost pressure on the mainland – overall, 44% of respondents experienced higher labour costs on the mainland during 3Q16, compared with 53% in 2Q16.


The overall HKTDC Export Index went up to 38.8 for 3Q16, a slight improvement on 2Q16’s 37.2. While exporter confidence is clearly stabilising, many remain pessimistic with regard to their likely export performance over the short-term.

Chart: HKTDC Export Index
Chart: HKTDC Export Index


In 3Q16, timepieces and jewellery enjoyed strong rebounds - to 43 and 41.3 respectively - registering the highest readings across the major industries, while the index for electronics also moved up, rising to 39.3 in 3Q16, from 37.4 in 2Q16. The indices for clothing and machinery, though, fell slightly to 32.3 and 39.4, respectively. Toys exporters took a negative turn in 3Q16, with the respective index retreating to 28.9, after its high of 41.5 in the previous quarter.

Table: HKTDC Export Index
Table: HKTDC Export Index


With regard to the major markets, export confidence has remained largely the same over the last quarter. The index for Japan fell slightly, dipping to 46.9 in 3Q16, but remained the highest reading for any of the major markets. This was followed by the US (46.7) and the Chinese mainland (46.1), both of which recorded higher readings compared to the previous quarter. The index for the EU, however, dropped slightly, falling to 42.4, the lowest of all the major markets in 3Q16.

Table: HKTDC Export Index by Market
Table: HKTDC Export Index by Market


The Offshore Trade Index edged down to 33.8 in 3Q16, compared with 34.8 in 2Q16. This can be seen as a sign that export confidence in offshore trade performance (i.e. those shipments not passing through Hong Kong, but handled by Hong Kong exporters) is holding steady, although a reading below 50 still indicates something of a pessimistic sentiment. In addition, with a lower reading than the HKTDC Export Index, Hong Kong’s offshore trade is also expected to underperform Hong Kong’s overall exports in the near term.

Chart: Offshore Trade Index
Chart: Offshore Trade Index


The Trade Value Index edged down slightly to 39.4 in 3Q16, falling from 40.9 in 2Q16. With the exceptions of the electronics and clothing sectors, the indices of all of the major industries leapt to above 40 in 3Q16. Readings below 50, however, still signal lower unit prices in the near term. Of particular note, the indices for jewellery and timepieces went up in 3Q16 to 48.1 and 48, respectively, moving close to the watershed mark of 50. The index for clothing, however, fell to 31.1 in 3Q16, the lowest seen among the major industries.

Table: Trade Value Index
Table: Trade Value Index


The Procurement Index rebounded to 38.6 in 3Q16, rising from 34.3 in 2Q16, reflecting the improved procurement sentiment. A reading below the watershed mark of 50, however, still indicates that companies may be expecting a fall in input costs and/or sluggish demand ahead. In 3Q16, the indices for timepieces, electronics and jewellery rebounded from the previous quarter, climbing to 45, 38.6 and 35.6 respectively. By comparison, those for clothing, toys and machinery fell noticeably.

Table: Procurement Index
Table: Procurement Index


The Employment Index edged down slightly to 43.4 in 3Q16, falling from 43.6 in 2Q16. With the exception of the electronics and toys sectors, all industries showed higher readings compared to the previous quarter. While all industries registered readings above 40 in 3Q16, hiring confidence was relatively higher in the timepieces and machinery sectors.

Table: Employment Index
Table: Employment Index

 

Content provided by Picture: Wenda Ma
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