Business sentiment of SMEs ‘eases’ in July

The current diffusion index dropped to 43.4 during the month.

Business sentiment amongst small and medium enterprises in Hong Kong “eased” in July after the current diffusion index (DI) dropped to 43.4.

The Census and Statistics Department (C&SD) reported this went down from 46.3 in June. This is also lower than the expected 48 outlook DI on business receipts in the month ahead. 

“Overall business sentiment among SMEs eased further in July amid the deteriorating external environment and the increase in local COVID-19 infection cases,” a government spokesman said.

“Softening was seen in most surveyed sectors, in particular the real estate and import and export trades sectors. Expectations on the business situation in the following month dipped into the contractionary zone. Overall employment sentiment also showed some softening.”

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The current DIs on business receipts for real estate declined to 42.5 from 48.2; whilst it slipped to 41.1 from 46.3 in the import and export trades sector. 

“Worsening global economic prospects and the stepping up of monetary policy tightening by major central banks would continue to put pressure on business sentiment, especially the externally-oriented sectors,” the spokesman also said. 

The spokesman added that despite this, the second phase of the Consumption Voucher Scheme is seen to boost consumption-related sectors. He noted, however, that this will still depend on the development of the epidemic and financial condition in the city.

“It remains crucial for the community to continue to work in unison with the Government to keep the local epidemic under control.”