Hong Kong: Manufacturing PMI plunges to record low in February
March 4, 2020
The IHS Markit Purchasing Managers’ Index (PMI) plunged to 33.1 in February (January: 46.8), and remained markedly below the 50-threhold that indicates an improvement in the private sector economy over the previous month. February’s print marks 23 consecutive months of deteriorating operating conditions in Hong Kong’s private sector and the sharpest decline in the series’ approximately 22-year history.
February’s downturn came on the back of declines in new orders, production and exports—all of which fell at the quickest rate on record. Moreover, business sentiment decreased to the lowest level seen since data collection began in 2012, and employment levels dipped.
Commenting on February’s print, Bernard Aw, principal economist at IHS Markit, noted:
“With the Hong Kong SAR economy shrinking 1.9% during 2019, the average PMI so far for the first quarter of 2020 points to a deepening recession, raising the urgency for policy support.”
Going forward, political turmoil should continue to pummel Hong Kong’s private sector. Moreover, the outbreak of the coronavirus should batter economic activity in the short-term. That being said, the easing in the U.S.-China trade war and monetary policy among key central banks could provide some relief to business investment.
Author: Steven Burke, Economist