Hong Kong PMI July 2016

Hong Kong

PMI climbs slightly in July

The Nikkei Hong Kong Purchasing Managers’ Index (PMI) released by IHS Markit climbed from June’s 45.4 to 47.2 in July. This returned it to May’s ten-month high, though it remains below the 50-threshold that separates contraction from expansion in business conditions, where it has been since March 2015.

July’s figure revealed a further deterioration of operating conditions in the private sector, albeit at a slower rate than in June. New orders fell and therefore output contracted in July. Private sector firms said they were responding to the bleak environment by reducing employees and restructuring their companies. Businesses also cut their purchasing activities for the 25th consecutive month. While input prices inched up in July, output prices reduced slightly, increasing the pressure on profit margins.

Annabel Fiddes, Economist at Markit, stated that, “businesses had reportedly struggled in the face of a weak global economic environment, unfavorable exchange rates and a subsequent fall in client spending. Unless there is a meaningful improvement in demand, the data suggest that the sector will contract further in upcoming months, which is likely to translate into more bad news for the labor market.”

FocusEconomics Consensus Forecast panelists see fixed investment falling 2.8% in 2016, which is down 0.8 percentage points from last month’s estimate. For 2017, the panel expects fixed investment to rebound and increase 1.1%.

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Hong Kong PMI Chart

Hong Kong PMI July 2016 0

Note: Nikkei Hong Kong Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Nikkei and IHS Markit.

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