SMEs optimism hit 3-year high as economy rebounds

The overall SME leading business index rose to 46.6, the highest since Q3 2018.

The overall small and medium enterprise (SME) leading business index in Hong Kong rose by 4.4 to 46.6 for the third quarter (Q3) of 2021, signalling the growing optimism of businesses as the economy rebounds.

“The results show returning business confidence of the local SME community amid the gradual easing of COVID-19 situation in Hong Kong and SMEs’ optimism about the global economy,” the Hong Kong Productivity Council (HKPC) said in a statement.

It noted that this is the overall index result, reported by Standard Chartered, for Q3 is also the highest since Q3 2018.

Moreover, the report found that all the five component sub-indices increased during the quarter with the highest registered in the “Global Economy” which surged to 52.8 from 43.6. This is also an “impressive leap” from 7.9 in the previous year.

“The pandemic situation in Hong Kong was pretty stable during the survey period. The overall index is experiencing a steady U-shape rebound with the outlooks of ‘Global Economy’ and ‘Recruitment Sentiment’ being positive,” HKPC Chief Digital Officer Edmond Lai said.

“The survey shows that SMEs are flexing their muscles to pick up their business as fast as possible by increasing investment and expanding staff size.”

The "Recruitment Sentiment" stood at 50.9, which makes this and the "Global Economy" the first two sub-indices to surpass the 50 neutral marks in the past two years.

Eight of the 11 surveyed industries have recorded two-year high in their industry indices. “Information and Communications,” “Real Estate,” and “Social and Personal Services” are the best performing industries, with their respective indices all over 50.

On investment sentiment in the coming quarter, most SMEs are planning to spend more on “Information Technology” and “Product and Marketing Promotion”; whilst 24% of SMEs plan to increase investment in “Information Technology,” 20% SMEs would like to boost investment in “Product & Marketing Promotion.”

Meanwhile, 63% of SMEs surveyed expected an upcoming increase of “Raw Material Cost,” which is 5% higher than the previous quarter.