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Export Confidence on the Rebound

The HKTDC Export Index is designed to monitor the current export performance of Hong Kong traders and gauge their near-term prospects.

  • Hong Kong exporters’ confidence improved in 1Q14, with the HKTDC Export Index rebounding strongly to 48.1, a rise of some 10 points.
  • All major industries and markets showed higher export confidence in 1Q14. In particular, the indices for the Chinese mainland and for Japan rose to above 50.
  • Unit prices in general are expected to increase in the current quarter. The procurement sentiment remains positive, which may signal a rise in input costs, especially for toys and timepieces.
  • In 1Q14, 71% of respondents reported higher labour costs on the mainland during the surveyed quarter, compared to 68% in 4Q13. This could be due to seasonal factors, with workers traditionally getting pay rises after Chinese New Year (CNY).
  • About half of our surveyed companies said they themselves or their suppliers experienced labour shortages after CNY. Among them, 56% said the post-CNY labour shortage problem was more acute than last year, while another 42% said the situation was more or less the same this year.

The HKTDC Export Index, rebounded to 48.1 in the first quarter of 2014 (1Q14), from 38.5 in 4Q13, reflecting improving export confidence. However, a reading below 50 indicates a pessimistic sentiment and signals a quarter-on-quarter contraction of Hong Kong’s exports.

Chart: HKTDC Export Index

All major industries showed higher export confidence in 1Q14. In particular, the index for machinery increased to 52.1 in 1Q14, signalling an optimistic sentiment. By contrast, timepieces, toys and clothing recorded the lowest readings of 43.6, 44.1 and 44.8, respectively.

Table: HKTDC Export Index

Export sentiment also improved across all major markets. In particular, the indices for Japan and the Chinese mainland both increased to 51.1 in 1Q14, back into expansionary territory. The indices for the US and the EU also rose, registering 48.9 and 48.1 respectively.

Table: HKTDC Export Index

The Offshore Trade Index increased only slightly to 41 in 1Q14, from 40 in 4Q13. Offshore trade (shipments not passing through Hong Kong, but handled by Hong Kong traders) is likely to shrink on a quarter-on-quarter basis and underperform Hong Kong’s overall exports.

Chart: Offshore Trade Index

The Trade Value Index edged up to 56.2 in 1Q14, hinting at higher unit prices in general in the near term. Among major industries, toys and timepieces saw the highest readings of over 60. Clothing exporters, with the index at 50, are neutral with regard to a change in unit prices in the near term.

Table: Trade Value Index

The Procurement Index has trended downwards, registering 51.8 in 1Q14 yet staying in expansionary territory. Among the major industries, toys and timepieces saw the highest readings. The improved procurement sentiment in the quarter may reflect higher prices for raw materials/semi-manufactures or an optimistic outlook over the longer term.

Table: Procurement Index

The Employment Index increased to 48.9 in 1Q14, from 43.4 in 4Q13. With its reading above 50, jewellery is the only industry that expects labour expansion over the short term. By contrast, clothing, timepieces and toys had the lowest readings in 1Q14, signalling labour contraction.

Table: Employment Index

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Content provided by Picture: HKTDC Research
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