3 May 2010
Most U.S. businesses expect trade volumes to increase but are concerned about effects of exchange rate fluctuations
U.S. businesses are growing more confident in their global trade outlook since the last half of 2009, pointing toward an expected increase in trade activity over the next six months. The latest HSBC Trade Confidence Index released today revealed that nearly three in five U.S. respondents (58%) anticipate higher trade volumes, a 17 % increase compared to six months ago.
The HSBC Trade Confidence Index,1 which surveyed more than 5,000 small and mid-market businesses (SMEs and MMEs) in 17 global markets, showed an overall positive outlook with an average global reading of 116 on a scale of 0 to 200, with 100 as a neutral reading. This is up six points from the global reading in the last half of 2009 (110). Sentiment continues to be the highest among the emerging markets with United Arab Emirates (134), India (133) and Vietnam (132) and Brazil (129), illustrating heightened confidence in their local economies' trade activity and growth. In the developed countries, U.S. businesses' confidence rose three points to 110 from 107 in the last half of 2009. All markets surveyed point toward a positive outlook except for France, which scored 95.
U.S. businesses identify emerging markets as the most promising regions for growth. Based on responses, Latin America established itself as a popular region for trade among companies in the U.S. The U.S. businesses looking at Latin America for growth nearly doubled from 14 % to 27 % in the last six months, surpassing Greater China (23%).
"The HSBC Trade Confidence Index consistently reveals that emerging markets in the Middle East, Asia and Latin America are leading the trade recovery and present an enormous opportunity for U.S. exporters and importers," said William Nowicki, Head of Trade and Supply Chain for HSBC North America. "Small and mid-size businesses worldwide are steadily becoming more optimistic about their global economic outlook and are confident in a sustainable rebound. However, there are still barriers to international growth. Foreign exchange volatility is one of the most commonly cited barriers followed by concerns over costs of essential services, such as shipping and storage, and trade regulation."
U.S. businesses overall are confident about their access to trade finance, with nearly 70 % anticipating that access will remain at the same level and nearly one-quarter (23%) feeling that trade finance will increase over the next six months. The outlook remains stable on buyer default and supplier non-delivery risks, consistent with previous sentiment.
Of particular interest, U.S. companies plan to demonstrate increased control over their buyer relationships by tightening their payment terms and duration, limiting the loan or credit amount or closely monitoring debt and accounting items.
In summary, the HSBC Trade Confidence Index found a range of signs in support of a positive global trade outlook:
Please see the attached report HSBC Trade Confidence Index - May 2010 for more information. The survey was conducted by research company TNS in February and March 2010. In the U.S., the sample size included 300 small and mid-size businesses with annual turnover between US $20 million to $250 million.
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1 The first Wave of the HSBC Confidence Index covered Hong Kong, mainland China, Singapore, Australia, India, Vietnam and UAE. The UK, USA, Brazil and Malaysia were added in Wave 2. France, Germany, Canada, Indonesia, Saudi Arabia and Mexico were added in Wave 3.
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