This photo shows the city view of Hong Kong on May 5, 2023. (PHOTO / XINHUA)

The business situation of Hong Kong’s small and medium-sized enterprises (SMEs) showed signs of improvement in July as the city’s steady economic recovery continues, a government survey indicated on Wednesday.

According to the Census and Statistics Department’s latest monthly survey on the SMEs’ business situation, the current diffusion index on business receipts rose from June’s 44.4 to 45.8 in July, although it still remains contractionary.

The current diffusion index on new orders for the import and export trades also experienced a slight increase from 46.3 in June to 46.8 in July

The situation is expected to improve further with a reading of 49.5 in August, the department said.

READ MORE: Hong Kong services industries see improved business in Q1

A reading above 50 indicates a generally favorable business condition.

The majority of surveyed sectors saw varying degrees of growth in business receipts in July compared with a month earlier, particularly business services, whose diffusion index increased from 45.6 to 49.2; and restaurants, which rose from 45.2 to 48.

The expectations regarding business receipts for the next month showed progress compared with the previous month for various surveyed sectors, especially in wholesale trade and business services.

“Overall business sentiment among SMEs saw some improvement in July, with the current diffusion indexes for most surveyed sectors recording increases. Expectations on the business situation in one month’s time also turned better,” a government spokesman said.

The current diffusion index on new orders for the import and export trades also experienced a slight increase from 46.3 in June to 46.8 in July. The outlook for new orders in August sustained a positive momentum with 49.1.

The spokesman remarked on the overall employment situation for July, saying that it “remained broadly stable” with a marginal dip from 49.8 in June to 49.6 in July.

READ MORE: Survey: Recruitment, investment sentiments optimistic among Hong Kong SMEs

In addition, about 3.4 percent of the SMEs surveyed in July expressed a need for credit, slightly down from the 3.8 percent reported in June.

Looking ahead, the spokesman said the Hong Kong economic recovery, coupled with the government’s measures to boost momentum should provide support for business sentiment.

However, challenging external factors and tight financial conditions will continue to pose uncertainties, the spokesman said.

Contact the writer at irisli@chinadailyhk.com