Business Outlook Dims: More Companies Expect Declines in Q2 2026, C&SD Survey Reveals

Business expectations for the second quarter of 2026

The Census and Statistics Department (C&SD) released today (April 24) the results of the Quarterly Business Tendency Survey for the second quarter (Q2) of 2026.

Business Situation

For all surveyed sectors taken together, the proportion of respondents expecting their business situation to be better (11%) in Q2 2026 over the preceding quarter is lower than that expecting it to be worse (16%).

When compared with the results of the Q1 2026 survey round, the proportion of respondents expecting a better business situation in Q2 2026 is 11%, broadly the same as the corresponding proportion in Q1 2026. At the same time, the proportion of respondents expecting a worse business situation had increased from 14% in Q1 2026 to 16% in Q2 2026.

Analysed by sector, respondents in most of the surveyed sectors expect their business situation to decrease on balance or remain broadly unchanged in Q2 2026 as compared with Q1 2026. In particular, significantly more respondents in the accommodation and food services sector expect their business situation to be worse in Q2 2026 as compared with Q1 2026. On the other hand, in the financing and insurance sector, more respondents expect their business situation to be better, as compared to those expecting it to be worse.

The results of the survey should be interpreted with care. In this type of survey on expectations, the views collected in the survey are affected by the events in the community occurring around the time of enumeration, and it is difficult to establish precisely the extent to which respondents’ perception of the future accords with the underlying trends. The enumeration period for this survey round was from March 3, 2026 to April 13, 2026.

Volume of Business / Output

Respondents in quite a number of the surveyed sectors expect their volume of business/ output to decrease on balance or remain broadly unchanged in Q2 2026 as compared with Q1 2026. In particular, significantly more respondents in the accommodation and food services sector expect their volume of business to decrease in Q2 2026 over Q1 2026. On the contrary, in the real estate and financing and insurance sectors, more respondents expect their volume of business to increase, as compared to those expecting it to decrease.

Employment

Respondents in most of the surveyed sectors expect their employment to decrease on balance or remain broadly unchanged in Q2 2026 as compared with Q1 2026. In particular, more respondents in the accommodation and food services and information and communications sectors expect their employment to decrease in Q2 2026 over Q1 2026. In the real estate sector, however, more respondents expect their employment to increase, as compared to those expecting it to decrease.

Selling Price / Service Charge

Respondents in most of the surveyed sectors expect their selling prices/service charges to go up or remain broadly unchanged on balance in Q2 2026 as compared with Q1 2026. In particular, more respondents in the import/export trade and wholesale sector expect their selling prices to go up in Q2 2026 over Q1 2026. In the construction sector, however, significantly more respondents expect their tender prices to go down in Q2 2026 over Q1 2026.

Commentary

A Government spokesman said that the overall near-term business outlook among large enterprises turned somewhat more cautious for the second quarter of 2026, amid heightened uncertainty in the external environment following the Middle East conflict. The overall hiring appetite also eased slightly.

Looking forward, the spokesman said that the evolving geopolitical situation in the Middle East remains a key source of external uncertainty, posing risk to the near-term business outlook. Nonetheless, the continued expansion of economic activities in Hong Kong will provide support to local business sentiment. The Government has introduced short-term targeted measures to address the recent increase in fuel prices, and will continue to closely monitor the development.

Further Information

The survey gathers views on short-term business performance from the senior management of about 570 prominent companies in various sectors in Hong Kong with a view to providing a quick reference, with minimum time lag, for predicting the short-term future economic performance of the local economy.

The survey covers 10 major sectors in Hong Kong, namely manufacturing; construction; import / export trade and wholesale; retail; accommodation and food services (mainly covering services rendered by hotels and restaurants); transportation, storage and courier services; information and communications; financing and insurance; real estate; and professional and business services sectors.

Views collected in the survey refer only to those of respondents on their own companies rather than those on the respective sectors they are engaged in, and are limited to the expected direction of quarter-to-quarter change (e.g. "up", "same" or "down") but not the magnitude of change. In collecting views on the quarter-to-quarter changes, if the variable in question is subject to seasonal variations, respondents are asked to provide the expected changes after excluding the normal seasonal variations.

Survey results are generally presented as "net balance", i.e. the difference between the percentage of respondents choosing "up" and that choosing "down". The percentage distribution of respondents among various response categories (e.g. "up", "same" and "down") reflects how varied their business expectations are. The "net balance", with its appropriate sign, indicates the direction of expected change in the variable concerned. A positive sign indicates a likely upward trend while a negative sign indicates a likely downward trend. However, the magnitude of the "net balance" reflects only the prevalence of optimism or pessimism, but not the magnitude of expected change, since information relating to such magnitude is not collected in the survey.

Furthermore, owing to sample size constraint, care should be taken in interpreting survey results involving a small percentage (e.g. less than 10%) of respondents in individual sectors.

Chart 1 shows the views on expected changes in business situation for the period Q2 2025 to Q2 2026.

Table 1 shows the net balances of views on expectations in respect of different variables for Q2 2026.

The survey results are published in greater detail in the "Report on Quarterly Business Tendency Survey, Q2 2026". Users can browse and download the publication at the website of the C&SD (www.censtatd.gov.hk/en/EIndexbySubject.html?pcode=B1110008&scode=300).

Users who have enquiries about the survey results may contact the Business Expectation Statistics Section of the C&SD (Tel: 3903 7263; E-mail: business-prospects@censtatd.gov.hk).

Source: AI-found images

27 landlords of subdivided units under regulated tenancies convicted of contravening relevant statutory requirements

Twenty-seven landlords of subdivided units (SDUs), who contravened Part IVA of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) (the Ordinance), pleaded guilty and were fined between $800 and $22,400, amounting to a total of $119,700, on April 10, April 17 and today (April 24) at the Eastern Magistrates' Courts. Since the Ordinance came into force, the Rating and Valuation Department (RVD) has continuously strengthened enforcement actions and has prosecuted a total of 1 538 cases to date. Among the 1 168 cases dealt with by the court, all were successfully convicted, which involved a total of 1 023 SDU landlords, amounting to a total of $3,178,960 in fines. In addition, 370 cases are pending a hearing.

The offences of these 27 landlords include (1) failing to submit a Notice of Tenancy (Form AR2) to the Commissioner of Rating and Valuation within 60 days after the term of the regulated tenancy commenced; (2) failing to produce copies of the bills and provide an account in writing when requiring the tenant to pay for the reimbursement of the apportioned water and/or electricity charges; and (3) requesting the tenant to pay money other than the types permitted under the Ordinance (including requiring the tenant to pay an amount of rent for the second-term tenancy exceeding the maximum amount of rent permitted under the Ordinance).

The RVD earlier discovered that the landlords failed to comply with the relevant requirements under the Ordinance. Upon a comprehensive investigation and evidence collection, the RVD prosecuted the landlords.

A spokesman for the RVD reiterated that SDU landlords must comply with the relevant requirements under the Ordinance, including prohibiting landlords from doing any act calculated to interfere with the peace or comfort of members of the tenant's household, with the intention of causing the tenant to give up occupation of the SDU; or requiring the tenant to pay an amount of rent for the second-term tenancy exceeding the maximum amount of rent permitted under the Ordinance, and also reminded tenants of their rights under the Ordinance, including a four-year (i.e. two years plus two years) security of tenure. He also stressed that the RVD will continue to take resolute enforcement action against any contraventions of the Ordinance. Apart from following up on reported cases, the RVD has been adopting a multipronged approach to proactively identify, investigate and follow up on cases concerning landlords who are suspected of contravening the Ordinance. In particular, the RVD has been requiring landlords of regulated tenancies to provide information and reference documents of their tenancies for checking whether they have complied with the requirements of the Ordinance. If a landlord, without reasonable excuse, refuses to provide the relevant information or neglects the RVD's request, the landlord commits an offence and is liable to a maximum fine at level 3 ($10,000) and to imprisonment for three months. Depending on the actual circumstances, and having regard to the information and evidence collected, the RVD will take appropriate actions on individual cases, including instigating prosecution against suspected contraventions of the Ordinance. In addition, the RVD has started a new round of publicity and education work to enhance public awareness about the key offences and penalties, emphasising that the RVD proactively checks whether landlords have committed the offences under the Ordinance.

To help curb illegal acts as soon as possible, members of the public should report to the RVD promptly any suspected cases of contravening the relevant requirements. Reporting can be made through the telephone hotline (2150 8303), by email (enquiries@rvd.gov.hk), by fax (2116 4920), by post (15/F, Cheung Sha Wan Government Offices, 303 Cheung Sha Wan Road, Kowloon), or in person (visiting the Tenancy Services Section office of the RVD at 7/F, South Tower, Tseung Kwan O Government Offices, 30 Tong Yin Street, Tseung Kwan O, New Territories, and please call 2150 8303 to make an appointment). Furthermore, the RVD has provided a form (Form AR4) (www.rvd.gov.hk/doc/en/forms/ar4.pdf) on its website to enable SDU tenants' reporting to the RVD.

The RVD reminds that pursuant to the Ordinance, a regulated cycle of regulated tenancies is to comprise two consecutive regulated tenancies (i.e. the first-term tenancy and second-term tenancy) for an SDU, and the term of each regulated tenancy is two years. A tenant of a first-term tenancy for an SDU is entitled to be granted a second-term tenancy of the regulated cycle, thus enjoying a total of four years of security of tenure. The RVD has been issuing letters enclosing relevant information to the landlords and tenants concerned of regulated tenancies in batches, according to the expiry time of their first-term tenancies, to assist them in understanding the important matters pertaining to the second-term tenancy, and to remind them about the procedures that need to be followed about two months prior to the commencement of the purported second-term tenancy as well as their respective obligations and rights under the Ordinance. These landlords and tenants may also visit the dedicated page for the second-term tenancy on the RVD's website (www.rvd.gov.hk/en/tenancy_matters/second_term_tenancy.html) for the relevant information, including a concise guide, brochures, tutorial videos and frequently asked questions. The landlords and tenants concerned are also advised to familiarise themselves with the relevant statutory requirements and maintain close communication regarding the second-term tenancy for handling the matters properly and in a timely manner according to the Ordinance.

For enquiries related to regulated tenancies, please call the telephone hotline (2150 8303) or visit the RVD's webpage (www.rvd.gov.hk/en/our_services/part_iva.html) for the relevant information.

Source: AI-found images