14 Dec 2016
HKTDC Export Index 4Q16: Short-term Export Confidence Down but Holding Steady for 2017
The HKTDC Export Index monitors the current export performance of Hong Kong traders and gauges their near-term prospects.
- Although the confidence of Hong Kong exporters dropped in 4Q16, the majority maintain a neutral outlook with regard to their prospects for next year. Overall, 59% of respondents indicated that they expect their sales throughout 2017 to increase or remain unchanged.
- With the exception of the toy sector, all of the major industries reported lower readings for 4Q16. Toys and machinery exporters, however, were less pessimistic than those in other sectors. Toy exporters also had the most optimistic procurement sentiment on a quarter-to-quarter basis.
- Export confidence was slightly down with regard to all of the major markets. Of these, Japan inspired the highest level of confidence in 4Q16 (46.2), followed closely by the Chinese mainland (45.3) and the US (44.7).Coming in at 42, the EU was the worst performer.
- While the Trade Value Index edged up, it was still well below 50, the watershed level. At same time, with the procurement Index declining, this hinted at a looming fall in input costs and/or sluggish future demand.
- Compared with 3Q16, labour cost pressure on the mainland increased slightly, but remained on a downward trend. Overall, 48% of respondents experienced higher mainland labour costs during 4Q16, compared with 44% in 3Q16 and 53% in both 2Q16 and 1Q16.
The level of the overall HKTDC Export Index fell to 33.7 for 4Q16, a drop from 38.8 in 3Q16. While exporter confidence is clearly stabilising, many remain pessimistic with regard to their likely export performance over the short-term.
With the exception of the toy sector, all of the major industries reported lower readings for 4Q16. The decline was the most significant in the jewellery industry, with the respective index dropping to 30.4 in 4Q16 (down from 41.3 in 3Q16). The clothing sector index fell below 30 to become the most pessimistic of all the major industries, while toys and machinery exporters were the least pessimistic (both registering 34.9 in 4Q16).
In 4Q16, export confidence was slightly down with regard to all of the major markets. The index for Japan fell slightly, dipping to 46.2 in 4Q16, but remained the highest reading for any of the major markets. This was followed by Chinese mainland (45.3) and the US (44.7).The index for the EU, however, dropped slightly to 42, with its prospects inspiring less confidence than any of the other major markets.
The Offshore Trade Index rose to 35.2 in 4Q16, a climb from 33.8 in 3Q16. 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. A reading below 50, though, still indicates something of a pessimistic sentiment. With a higher reading than the HKTDC Export Index, Hong Kong’s offshore trade is expected to outperform Hong Kong’s overall exports in the near term.
The Trade Value Index edged up to 41.6 in 4Q16, rising from 39.4 in 3Q16. The indices for electronics, clothing and toys climbed, while those for jewellery, timepieces and machinery all fell. With the exception of the clothing sector, the indices of all of the major industries remained above 40 in 4Q16. Readings below 50, however, still signal lower unit prices in the near term.
The Procurement Index edged down to 34.4 in 4Q16 (from 38.6 in 3Q16), reflecting a worsening procurement sentiment. Moreover, a reading below the watershed mark of 50 indicates the possibility of a fall in input costs and/or sluggish future demand. Except in the case of the toy sector, the procurement indices for all major of the major industries declined. The biggest single drop came in the timepieces sector, with a fall from 45 in 3Q16 to 34 in 4Q16.
The Employment Index rose slightly to 45.1 in 4Q16 (43.4 in 3Q16). Except for clothing and timepieces, all industries showed higher readings than in the previous quarter. A reading below 50, however, still signals the likelihood of labour contraction in the near term. Hiring confidence is the highest in the toy sector, which reported a reading of 46.5 in 4Q16.