Hong Kong business confidence spikes to highest level in nearly 2 years
Survey finds mainland demand boosting sentiment, but executives remain cautious
An index of business conditions in Hong Kong spiked in January to its highest level in almost two years, driven by robust activity from the mainland and improved business conditions in the city, although businessmen remained cautious given uncertain economic conditions in the US and China.
The HSBC purchasing managers' index showed a reading of 52.7 in January from 51.2 in December, the highest such reading since February 2012. The index has stayed above 50 since September of last year. Some 300 companies take part in the monthly survey.
"The growth momentum in Hong Kong business activity looks like it will be sustained at the start of 2014," said John Zhu, an economist at HSBC.
"The January data indicated that output and new orders are growing at the fastest rate in nearly two years, while the pace of job cuts have also moderated. [The] acceleration of new business from mainland China as well as the build-up in work backlogs suggests demand conditions are likely to remain favourable in the near future."
Hong Kong companies' increased confidence has yet to staunch job losses in the city's private sector, which has been cutting staff since the second quarter of last year owing to firms either closing or trimming the workforce as a result of increased competition.
"We are not as pessimis- tic as we were six months ago as orders started to increase from November. But it was partly because some of my competitors have gone out of business," said Eddie Lo, chief executive of Lomak Industrial, a Hong Kong-based lighting company.
Lo said orders of lighting products were up 15 to 20 per cent year on year in the last three months, but he remained cautious going forward.
"I would rather wait until April or May to see whether the growth in orders is sustainable and decide whether to expand my business then," Lo said.
The survey also showed that purchasing activity rose at the strongest rate in 34 months, which prompted many companies to raise production in line with stronger client demand. Input buying increased for the fourth consecutive month in January.
