Hong Kong private sector grows at fastest pace in almost four years on back of tourists, exports
Nikkei Hong Kong Purchasing Managers’ Index stands at 51.5 for December, the highest since February 2014
Hong Kong’s private sector grew at its fastest pace in nearly four years in December, fuelled largely by exports to mainland China, according to a key indicator.
The robust performance prompted local businesses to abandon the negative economic outlook they had held for 34 months, with company executives expressing optimism over market conditions in the year ahead.
The Nikkei Hong Kong Purchasing Managers’ Index – a gauge of private sector business conditions which includes manufacturing, services, retail and construction – stood at 51.5 in December, up from 50.7 a month ago.
Any score above 50 signals growth while a score below 50 indicates contraction. The rate of growth or contraction is indicated by how far the figure deviates from the median of 50, which represents no change from the previous month.
The index is compiled using questionnaires sent to executives at over 300 firms in the city, asking them about new orders, employment, costs and other factors.
The December score was the highest since February 2014, when the city’s retail boom – which relied largely on mainland shoppers – reached the end of its run.
Firms which reported higher orders cited visitor numbers from the mainland as a factor – from January till November 2017, Hong Kong received 40.2 million visitors from across the border, a 3.6 per cent rise from the same period in 2016.
Wages, meanwhile, have risen for 20 months in a row, and the resulting inflationary pressure was demonstrated by the Price Charged Index, which accelerated to a six-month high in December.
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What may be more important, however, was that more companies were optimistic about the business outlook than those which were not – bucking a pessimistic trend dating back to February 2015.
“The new-found optimism saw firms raise selling prices at a faster rate even as cost inflation eased further, as they sought to alleviate the ongoing squeeze on profit margins,” said economist Bernard Aw of research firm IHS Markit, which compiles the survey.
Aw added that the private sector generally expected a solid start to 2018.
“Chinese demand rose further, contributing to renewed growth in total new business inflows in December ... [as] firms continued to raise purchasing activity and inventories in anticipation of higher sales.”
