16 Dec 2015
HKTDC Export Index 4Q15: Exporter Morale Drops, But Remains Neutral for 2016
The HKTDC Export Index monitors the current export performance of Hong Kong traders and gauges their near-term prospects.
- While Hong Kong exporters’ confidence dipped in 4Q15, exporters maintain a neutral outlook towards next year. For 2016, 59% of respondents expect their sales to increase or remain unchanged.
- Except in the case of timepieces, all major industries reported lower readings for 4Q15, indicating a sluggish export performance over the short-term.
- The outlook of the major markets remains weak, with quite a significant deterioration on the Chinese mainland. Exporters’ confidence was relatively higher towards Japan.
- Both the Trade Value Index and the Procurement Index declined for 4Q15, hinting at lower unit prices, a fall in input costs and/or a sluggish demand ahead.
- Labour cost pressures on the Chinese mainland subsided in 4Q15 – 50% of respondents reported higher labour costs on the mainland during the surveyed quarter, compared with 57% in 3Q15.
The HKTDC Export Index dropped for the second consecutive quarter, from 46.8 in 2Q15 to 37.1 in 3Q15 and 31.4 in 4Q15. This is the lowest level since 1Q09, when Hong Kong exports were hit hard by the global economic downturn. Overall, exporters took a more pessimistic with regard to their likely export performance over the short-term.
Except in the case of timepieces, all the major industries reported lower readings for 4Q15. Toys and jewellery exporters were the most pessimistic, with their respective indices falling below 30. The index for timepieces, however, edged up to 38.5, but was still well below the watershed of 50, indicating the likelihood of a sluggish export performance over the short-term.
Overall, exporters became more pessimistic towards all the major markets in 4Q15. The decline was the most significant with regard to the Chinese mainland, with the respective index dropping to 41.4 in 4Q15, from 45.7 in 3Q15. Exporters’ confidence was relatively higher towards Japan, which reported the highest reading for 4Q15 (46.6).
The Offshore Trade Index increased marginally to 36.4 in 4Q15, from 35.7 in 3Q15, but remained in the “negative” territory. This reflected a pessimistic 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). With a slightly higher reading than the HKTDC Export Index, Hong Kong’s offshore trade is likely to enjoy a better performance than Hong Kong’s overall exports in the near term.
The Trade Value Index edged down to 38.6 in 4Q15, from 42.6 in 3Q15. Except in the case of toys, all of the major industries reported lower readings in 4Q15, reflecting an expectation of lower unit prices in the near term. In particular, jewellery and clothing had notably low readings - 36.5 and 36.8, respectively - in 4Q15.
The Procurement Index dropped further in 4Q15, falling to 35.9 in from 38.2 in 3Q15. A reading below the watershed of 50 indicates that procurement activities are likely to shrink in the near term. Companies may be expecting a fall in input costs and/or sluggish demand ahead.
The Employment Index fell to 38.9 in 4Q15, from 43.9 in 3Q15. Except for jewellery and timepieces, all industries showed lower readings compared to the previous quarter. Hiring confidence was at its lowest in the clothing and electronics sector, which reported readings of 36.3 and 38.9, respectively, in 4Q15.