Economic Outlook - The Hong Kong economy is expected to maintain growth in the second half of the year, following a 3.1% growth in Q1 and a positive outlook for Q2 [7][18] - The government is actively supporting industries undergoing transformation, particularly in funding and digital upgrades for local retail and dining sectors [8][20] Investment and Business Environment - International investor confidence in Hong Kong is rising, with the Hang Seng Index increasing by 27% this year after an 18% rise last year [4] - The number of companies registered in Hong Kong from overseas has increased by 10% year-on-year, with 84 key enterprises expected to invest approximately HKD 500 billion, creating 20,000 jobs [4][5] Real Estate and Office Space - The government is not selling commercial land to allow the market to absorb existing office space, while also encouraging private entities to purchase office properties [2][13] - There has been significant demand for office space from multinational financial institutions, particularly in wealth and asset management sectors [2][14] Retail and Consumer Trends - Retail sales have shown signs of recovery, with a 2.4% increase reported in May after 14 months of decline [8] - The number of visitors to Hong Kong has increased significantly, with a double-digit growth rate in international tourists during the first half of the year [6][9] Talent Acquisition - Approximately 500,000 applications have been received for talent importation programs, with 330,000 approved and around 220,000 individuals having arrived in Hong Kong [5][20] Financial Sector Stability - Hong Kong's banking sector remains robust, with a capital adequacy ratio of approximately 21%, significantly above the global standard of 8% [15][20] - The overall banking system is characterized by strong liquidity and prudent provisioning for potential bad debts [15]

Group 1 - The unemployment rate in Hong Kong for the period from April to June 2025 is 3.5%, unchanged from the previous period [1] - The underemployment rate remains stable at 1.4% during the same timeframe [1] - Total employment decreased from 3,664,700 to 3,657,300, a reduction of approximately 7,400 individuals [1] Group 2 - The total labor force also declined from 3,800,500 to 3,793,500, a decrease of about 7,000 individuals [1] - The number of unemployed individuals (not seasonally adjusted) is reported at 136,200, which is similar to the previous figure of 135,800 [1] - The number of underemployed individuals decreased from 53,600 to 52,600, a reduction of about 1,000 [1] Group 3 - The unemployment rates across different industries showed varied changes, with declines noted in the arts, entertainment, and recreation sectors, as well as in professional and business services [1] - Conversely, increases were observed in the construction and food service sectors [1] - The Secretary for Labour and Welfare indicated that the trends in unemployment rates will differ across industries due to ongoing transformations [2]

Group 1 - The Hong Kong private sector is experiencing a further contraction, with the S&P Global Hong Kong Purchasing Managers' Index (PMI) dropping from 49 in May to 47.8, marking the largest decline since April 2022 [1] - New orders for businesses have decreased for five consecutive months, attributed to tight customer budgets and uncertainty in U.S. trade policies, leading to a significant reduction in business activity [1] - The production output has seen its most notable decline in a year, as both domestic and overseas business volumes have sharply reduced compared to May [1] Group 2 - Companies are cautiously managing employee recruitment due to concerns about business prospects, with pessimism among businesses reaching its highest level since September 2020 [1] - Input costs have risen, but the increase is the smallest since February 2021, with wage inflation slowing down helping to suppress cost increases [1] - The overall business confidence has dropped to its lowest level in nearly five years, raising concerns about the future performance of the sector [2]

Group 1 - The Hong Kong Purchasing Managers' Index (PMI) rose from 48.3 in April to 49 in May, indicating the smallest contraction in the business environment in three months, but it has remained in the contraction zone for four consecutive months [1] - Businesses in Hong Kong continued to reduce operating activities for the second consecutive month in May, with the reduction level remaining consistent with April [1] - The manufacturing sector experienced the most significant decline among the four major industry sectors, while the drop in new orders showed a slight monthly improvement [1] Group 2 - Employers in Hong Kong's private sector increased hiring in May, marking the first employment growth in four months and the most significant increase since May of the previous year, primarily driven by the manufacturing and construction sectors [1] - Companies further reduced their purchases of inputs in May, with a moderate decline in procurement quantities and a significant drop in inventory levels, reflecting a more cautious inventory strategy among businesses [1] - Despite a slight easing of pessimism regarding future business prospects in May compared to April, sentiment remains historically high, influenced by uncertainties in U.S. trade policies and weak domestic demand [2]

Core Insights - The overall business confidence among Hong Kong SMEs remains cautious despite a slight increase in the Composite Business Index to 43.8, reflecting the uncertain global economic outlook [1] - Three out of five sub-indices showed growth, specifically in "Business Conditions," "Profit Performance," and "Investment Intentions," while "Global Economy" and "Recruitment Intentions" declined [1] - The "Global Economy" sub-index fell to 24.9, nearing levels seen in Q2 2022, indicating increased challenges for Hong Kong SMEs due to global trade uncertainties [1] Investment Trends - Over 94% of surveyed Hong Kong SMEs plan to maintain or increase investments, with a focus on online marketing, e-commerce training, IT systems, R&D projects, and overall employee training [2] - The "Financial and Insurance" sector experienced the highest increase in the business index, while "Information and Communication," "Real Estate," and "Accommodation and Food Services" saw significant declines [2] Cost Expectations - The anticipated rise in material costs has slowed, with 54% of SMEs expecting increases, down three percentage points from the previous quarter [2] - The percentage of SMEs planning to raise employee salaries decreased by seven percentage points to 20%, and only 17% intend to increase product or service prices, down three percentage points [2] Future Business Strategies - Approximately 78% of SMEs have plans to adapt to current risks, primarily by increasing local customer bases and enhancing operational processes with AI/digital applications [4] - Nearly 29% of SMEs are considering expanding into other markets within the next three years, with a notable interest in mainland China and ASEAN regions [4][5] Support Initiatives - The Hong Kong Productivity Council has established "The Cradle Outbound Service Center" to provide comprehensive support for SMEs looking to expand overseas, addressing challenges in product, technology, and management exports [5]

Group 1 - The unemployment rate for January to March 2025, seasonally adjusted, remains at 3.2%, unchanged from December 2024 to February 2025 [1][2] - The underemployment rate also remains stable at 1.1% during the same period [1][2] - Total employment decreased from 3,709,500 in December 2024 to 3,692,700 in January to March 2025, a reduction of approximately 16,800 [1][2] Group 2 - The total labor force declined from 3,821,300 to 3,815,500, a decrease of about 5,800 [1][2] - The number of unemployed individuals increased from 111,700 to 122,800, an increase of approximately 11,100 [1][2] - The number of underemployed individuals rose from 40,700 to 42,700, an increase of about 2,000 [1][2] Group 3 - Unemployment rates varied across industries, with notable increases in the information and communications sector, social work activities, professional and business services (excluding cleaning services), and construction [1][2] - Conversely, the transportation and insurance sectors experienced declines in unemployment rates [2] - The government anticipates that external uncertainties due to trade tensions may affect hiring intentions in some industries, while domestic economic growth supported by government measures is expected to bolster labor demand [2]