Hong Kong PMI August 2016

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Hong Kong: PMI eases notably in August

September 5, 2016

The Nikkei Hong Kong Purchasing Managers’ Index (PMI) released by IHS Markit climbed from July’s 47.2 to 49.0 in August. This was the highest reading in over a year, though it remains below the 50-threshold that separates contraction from expansion in business conditions, where it has been since March 2015.

August’s figure saw output and new business declining at the slowest rate since June 2015, while new orders from mainland China dropped modestly. Although weak economic conditions continued to weigh on sales, a moderate improvement in client demand supported the softer decline in output. Private sector firms reduced their staffing levels for the eighth month in a row, pointing to lower production requirements. Businesses’ purchasing activities also fell at a softer rate in August, in line with the less pronounced decline in output. Of special interest was that, while input prices rose at the fastest pace since early 2015, output prices also increased for the first time in year, albeit only slightly.

Annabel Fiddes, Economist at Markit, stated that, “the data suggest that the worst may be over, but there still needs to be a meaningful upturn in client demand in order for a strong and sustained recovery to take place, which may be challenging given the relatively weak global economic environment.”

FocusEconomics Consensus Forecast panelists see fixed investment falling 2.5% in 2016, which is up 0.3 percentage points from last month’s estimate. For 2017, the panel expects fixed investment to rebound and increase 1.6%.

Author:, Economist

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Hong Kong PMI Chart

Hong Kong PMI August 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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