Standard Chartered SME Index for Q1 2018 rises to 49.4 Marked Improvement in Investment Sentiment with Business Confidence Hitting 2.5-Year High

The “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index) for the first quarter of 2018 has increased 2.9 points to 49.4, the highest record since the third quarter of 2015. Releasing the findings today (25 January 2018), the Hong Kong Productivity Council (HKPC) noted an improving business outlook among SMEs as the Index has been rising for two consecutive quarters. The “Investments” sentiment has also turned positive for the first time in the past 2.5 years, reflecting business confidence of SMEs.

Sponsored by Standard Chartered Bank (Hong Kong) Limited (“Standard Chartered Hong Kong”), the quarterly survey features an Overall Index comprising five Sub-Indices. In this quarter, all the Sub-indices have gone up. The “Staff Number” Sub-Index remains positive, and the “Investments” Sub-Index has rebounded, both standing at 53.2. The Sub-Indices for “Sales Amount” (48.8), “Profit Margin” (43.7) and “Global Economic Growth” (43.4) have increased 1.7, 2.2 and 7.6 points respectively.

For sectorial findings, all the three major Industry Sub-Indices have moved up. Driven by the higher readings in “Profit Margin” and “Investments”, the Import, Export & Wholesale Sub-Index increases most notably by 4.2 points, reaching 46.2. Both Manufacturing (42.0) and Retail (44.4) Sub-Indices continue the growth momentum of last quarter, with a rise of 0.7 and 1.5 points respectively. Among other industries, the Sub-Indices for “Financial & Insurance” and “Real Estate” reported at 64.3 and 52.2 respectively, the highest records since the launch of the survey.

Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered Hong Kong, said, “This is a very encouraging set of survey results, reflecting that the Hong Kong economy is likely getting off to a good start to 2018. Solid global growth momentum, modest monetary policy tightening among major central banks and accelerated reforms in China have boosted local sentiment. Better sales and profit margin expectations reflect improvement in actual business performance, while the ‘Investment’ Sub-index indicates recovering confidence among SMEs towards Hong Kong’s longer term outlook. All this should shore up Hong Kong’s ability in weathering possible headwinds, be it further Fed hikes or rising geopolitical tensions.

This survey also gauged the views of SMEs on manpower issue. Around 12% surveyed companies expected the staff turnover rate of more than 5% in 2018; while 30% are facing manpower shortages, in particular the “Accommodation and Food Services” (49%), “Retail” (44%) and “Information and Communication” (44%) sectors. Frontline employees (82%) and technical staff (67%) are in shortest supply for the “Accommodation and Food Services” and “Information and Communication” sectors respectively. The major difficulties in staff recruitment are the overtly high wages requested (42%), the lack of suitable candidates in the market (40%), and unappealing working environment/ job nature (19%).

Mr Gordon Lo, Director (Business Management) of HKPC, said, “SMEs can adopt automation and information technologies to handle repetitive and low-skilled processes to ease the shortage of frontline staff. They should also strengthen training of technical staff to enhance their competitiveness. With the recent launch of the HKPC Academy, HKPC aims to help enterprises set up industry-wide corporate academies to groom talents and enhance their knowledge and capabilities. ”

The survey also gauged the views of SMEs on the number of working hours. Over half of the SME employers work more than eight hours a day on average, with 20% work more than 10 hours. On the other hand, 48% of employers encourage their staff to leave office on time, while some of them consider the reasonable overtime work to be 30 minutes (8%), one hour (15%) and two hours (7%).

Conducted during the second half of December 2017, this survey successfully interviewed 854 local SMEs. To download a report of the “Standard Chartered Hong Kong SME Leading Business Index”, please visit the website: www.smeone.org.

For more details about the Index, please contact HKPC’s Kinson Leung at tel. (852) 2788 5795 or email: kinsonleung@hkpc.org.

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About “Standard Chartered Hong Kong SME Leading Business Index”
The “Standard Chartered Hong Kong SME Leading Business Index” is a forward-looking survey on local SMEs’ outlook on the overall business environment for the next quarter. For each quarterly survey, HKPC’s professional team interviews more than 800 local SMEs from the manufacturing, import/export trade and wholesale, retail, accommodation and catering services, information and communications, finance and insurance industry, professional services, and real estate industries. It covers SMEs’ outlook on their ‘sales amount’, ‘profit margin’, ‘investments’, ‘staff number’, and ‘global economic growth’ for the next quarter.

The Index aims to provide a useful reference for the public and SMEs in making strategic decisions and resource allocation amid the changing business environment.

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Chloe Chau
Manager
Corporate Development
Tel: (852) 2788 6158
Fax: (852) 2788 5056
Email: chloechau@hkpc.org
Website: www.hkpc.org

25 January 2018

Mr Gordon Lo (centre), Director (Business Management) of HKPC, announces the survey results of the "Standard Chartered Hong Kong SME Leading Business Index" for the first quarter of 2018, accompanied by Mr Wilson Wong (left), General Manager (Information Technology) of HKPC; and Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered Hong Kong.