Key Hong Kong economic index drops for third month as mainland China demand plummets
Business conditions in Hong Kong’s private sector deteriorated for the third month in a row last month to the lowest since 2011 – as new business from mainland China fell at the quickest pace since the global financial crisis.
Conditions for the private sector in Hong Kong deteriorated for the third month in a row last month to the lowest since 2011 as new business from mainland China fell at the quickest pace since the global financial crisis, a survey showed.
The Hong Kong Purchasing Managers' Index (PMI), compiled by HSBC/Markit, dropped to 47.6 last month from 48.6 in April and 49.6 in March.
The index measures business conditions based on new orders, output, employment, suppliers' delivery times and stock of items purchased.
Annabel Fiddes, an economist at survey co-author Markit, said: "Overall, the data suggests that Hong Kong's economy may struggle to recover any growth momentum in the near-term, as companies continued to shed staff and reduce their input buying in response to weaker demand conditions."
A reading below 50 means business activities are declining, while any reading above 50 means business is expanding.
Financial Secretary John Tsang Chun-wah said on Monday that Hong Kong faced challenging economic prospects, with a downturn in tourism and retail sales.
HSBC said the latest PMI data suggested that weaker client demand on the mainland was a key factor driving new business down last month, with new order intakes falling at the sharpest rate since December 2008 - at the height of the global financial crisis.
Output fell for the second successive month, with the rate of reduction the strongest seen in three and a half years, it said.
HSBC said subdued demand, rising staff costs and purchase prices mean there is little room for employment to improve.
Although unemployment is still very low - 3.2 per cent between February and April - this may not be sustainable, HSBC added.
