Hong Kong: PMI edges down in March
The Nikkei Hong Kong Purchasing Managers’ Index (PMI), released by IHS Markit, declined from 48.4 in February to 48.0 in March. The index thus remained below the 50-point threshold that separates expansion from contraction in the private sector, where it has been since April 2018.
The overall economic picture was little changed in March, as the U.S.-China trade dispute and a slowdown in the mainland continued to be the primary factors weighing on private sector activity in the month. New orders and output declined for the 12th consecutive month, as mainland Chinese demand continued to be feeble, and firms continued to reduce their backlogs of work as a result of weak demand conditions. Meanwhile, employment levels declined again, though survey respondents indicated this was due to voluntary resignations rather than to companies’ efforts to reduce headcounts.
Against a tepid demand backdrop, firms continued to reduce their purchasing activity and to deplete their input inventories, but input prices nevertheless rose due to reported shortfalls of raw materials amid stock depletion. Consequently, firms marginally raised their selling prices for the fourth month in a row.
Commenting on this month’s reading, Bernard Aw, principal economist at IHS Markit, noted:
“The latest Nikkei PMI data signalled major headwinds facing Hong Kong’s private sector persisted at the end of the first quarter. Business conditions continued to deteriorate in March amid a worsening demand environment. Firms also reported a gloomy outlook with growing concerns over the ongoing US-China trade disputes and greater competition, suggesting that the recent slowdown is unlikely to go away any time soon”.