The Resurgence of Small and Medium-Sized Enterprises in July

The Small and Medium-sized Enterprises Index (SMEI) experienced a significant rebound in July, reaching 50.4, according to economists Hunter Chan and Shuang Ding from Standard Chartered. This uptick came as a result of improvements in expectations and credit conditions within the market. After a minor setback in June when it dipped to 49.9, SMEI returned to expansionary territory the following month.

Despite the overall positive outlook for SMEs, the performance sub-index continued to linger in a contractionary phase for a second consecutive month, measuring at 49.7. This was predominantly due to the drag caused by the services sector. Industries such as real estate, construction, finance, retail, and catering faced declines, creating obstacles for the growth of SMEs.

On a more positive note, manufacturing activity saw a significant acceleration in July. SMEs in this sector reported faster production processes and an increase in both sales and new orders. This led to a rise in the manufacturing performance sub-index to 51.3, a stark improvement from the previous month’s 49.8. However, it is essential to note that labor-intensive industries experienced a decline, and external demand weakened as new export orders decreased below the 50 mark.

The services sector, on the other hand, showcased limited growth, as evidenced by a meager 0.3 point increase in the performance sub-index to 49.3. Sales within this sector continued to decline, with real estate, construction, retail, and wholesale being the primary contributors to the downturn. Accommodation and catering businesses also faced challenges in generating significant sales and attracting new orders during the month.

While the SMEI rebounded in July, there are still lingering challenges that need to be addressed for sustained growth. The mixed performance across various sectors highlights the importance of targeted interventions and strategies to support the overall health and vitality of small and medium-sized enterprises in the market. By closely monitoring these trends and implementing appropriate measures, policymakers and business owners can work together to ensure the continued resilience and success of SMEs in the coming months.