Hong Kong: PMI climbs as exports to mainland China surge
July 5, 2017
The Nikkei Hong Kong Purchasing Managers’ Index (PMI) released by IHS Markit came in above the 50-point threshold for a third consecutive month in June, edging up to 51.1 from May’s 50.5. May’s print seemed to confirm that the territory’s private sector expanded in each month of the second quarter, a multi-year first in which expansion in the private sector spanned three consecutive months.
Higher output and an increase in exports supported expansion in the private sector, with sales growth to mainland China accelerating from a month earlier and growing at the fastest pace in more than three years. Moreover, sustained output growth put pressure on both operating capacity and supply chains, with pressure on the former increasing the level of backlogs due by firms for the first time in more than two years. Meanwhile, input prices and wages both increased and consequently hiked input cost inflation for firms. Relatedly, hiring increased as firms sought to adjust to higher demand. Business confidence, however, remained downbeat for another month as new political leadership left firms uncertain about the incoming business climate.
Author: Christopher Thomas, Economist