Hong Kong: November PMI signals first expansion in business activity since March 2018
The IHS Markit Hong Kong SAR Purchasing Managers’ Index (PMI) edged up to 50.1 in November, from 49.8 in October, marking the best result since March 2018. As a result, the PMI moved just above the critical 50-threshold, suggesting that operating conditions in the Hong Kongese private sector improved marginally in November following months of decline due to the China-U.S. trade war, political protests and the Covid-19 pandemic.
November’s uptick was chiefly driven by gradually improving demand conditions and came despite tougher social distancing measures imposed in mid-November. New business fell at the softest pace in nearly three years in November, while the decline in output was modest and largely unchanged from the previous month. That said, employment levels contracted for the second month running in November, albeit only marginally, and backlogs of work continued to shrink. With regard to prices, input costs rose again while output charges fell at the slowest clip in 17 months. On a more negative note, a new wave of Covid-19 infections dampened business sentiment, as fresh containment measures boded ill for economic recovery ahead.
Commenting on the result, Bernard Aw, principal economist at IHS Markit, noted:
“The average PMI reading of 49.9 for the fourth quarter so far is the highest for nearly three years and consistent with annual GDP growth. That said, a global resurgence of Covid-19 cases and measures to contain fresh waves of infections locally pose as downside risks to the recovery.”