SME sentiment stays weak as receipts index slips in June

Business receipts index stays below 50 as real estate records the sharpest monthly fall.

Business sentiment amongst Hong Kong's small and medium-sized enterprises (SMEs) remained in contractionary territory in June, with the business receipts index edging down from the previous month, according to the Census and Statistics Department (C&SD).

The current diffusion index (DI) on business receipts fell to 44.0 in June from 44.4 in May, whilst the one-month outlook DI for July eased to 47.0 from 47.2. A DI reading above 50 generally indicates favourable business conditions, whilst a reading below 50 indicates otherwise.

Amongst the sectors surveyed, the real estate sector recorded the largest decline, with its business receipts DI falling to 45.6 from 49.3. The logistics sector also posted a lower reading, declining to 39.5 from 40.7.

Meanwhile, the current DI on new orders for the import and export trades rose slightly to 46.4 in June from 46.0 in May. The outlook DI on new orders for July stood at 47.2, down from 47.8 in the previous survey.

The June results followed a slight improvement in May, when the current DI on business receipts increased to 44.4 from 44.0 in April. During that month, the restaurants, logistics, and retail trade sectors all recorded higher readings.

A government spokesperson said business sentiment amongst SMEs remained cautious in June due to uncertainty surrounding developments in the Middle East conflict.

The spokesperson added that both the current and outlook DIs on business receipts edged down from May, whilst the overall employment situation remained steady.

Looking ahead, the spokesperson said the continued expansion of Hong Kong's economy should support business sentiment.

However, global conditions remain fluid, adding that any re-escalation of geopolitical tensions in the Middle East could weigh on business confidence. The government said it would remain vigilant to developments in the external environment.

The monthly survey covers about 600 SMEs, defined as companies employing fewer than 50 people.

The C&SD said respondents are asked to exclude seasonal factors when reporting their views.

The department said the survey provides a timely indicator of short-term business conditions faced by SMEs, with responses reflecting the operating conditions of participating companies rather than their sectors as a whole.