SME business sentiment rocked by Covid

A monthly report published on Wednesday by the Census and Statistics Department (C&SD) finds business sentiment among Small and Medium-sized Enterprises (SMEs) in Hong Kong weakened sharply last month, in the face of the deteriorating Covid-19 situation.

The current ‘diffusion index’ (DI) on business receipts amongst SMEs fell from 37.8 in January to 29.9 in February, its lowest level since early 2020, with sub-indices for all surveyed sectors showing declines. The DI for logistics fell from 41.7 to 20.0, while for real estate it dropped from 41.8 to 25.9. A reading above 50 indicates generally favourable sentiment, while one below 50 indicates the opposite.

Overall, the forward outlook was more optimistic. The forecast DI on business receipts for March was 38.5. The DI on new orders for the import and export trades fell from 44.0 in January to 40.2 in February, but the outlook for March was 42.8.

A government spokesman said that the local pandemic situation and various mitigation measures in place would continue to weigh on business sentiment in the near term, and that the recent sharp escalation of geopolitical tensions in Europe was also adding to the headwinds.

The monthly survey of SMEs covers businesses with fewer than 50 employees, and solicits feedback from a sample of about 600 enterprises. The bulk of the data was collected in the last week of February. The full report can be downloaded from the website of the C&SD.