Confidence among Hong Kong traders has risen slightly amid signs of recovery in the US and improving sentiment in the euro zone, according to a survey.
But garment exporters are even more pessimistic amid intensifying labour shortage problems and rising competition in the mainland.
The TDC Export Index, based on the views of 500 local exporters, rebounded to 43 during the first quarter this year from a two-year low of 40.6 last quarter. In the clothing sector, however, confidence level slumped to 37.7 this quarter from 42.9 in the previous period. A figure below 50 indicates a negative outlook.
Among the 500 exporters polled, 57 per cent said labour shortages during the Lunar New Year in the mainland were more severe than before, while nearly half said wages had jumped more than 10 per cent in China in the past three months, driving the labour-intensive clothing manufacturers into a corner.
'Some exporters have moved away from the Pearl River Delta to save costs, but the larger majority preferred to stay,' TDC chief economist Edward Leung Hoi-kwok said.
In another TDC survey conducted in December of 3,473 Hong Kong exporters, three-quarters said they had no plans to move despite an increasingly difficult business environment in the Pearl River Delta. Most do not like having production bases too far from home as they are too difficult to manage. Others said the delta had the best support infrastructure.