Hong Kong: PMI inches up in February
March 5, 2019
The Nikkei Hong Kong Purchasing Managers’ Index (PMI), released by IHS Markit, rose from 48.2 in January to 48.4. Nevertheless, the index remained below the 50-point threshold that separates expansion from contraction in the private sector, where it has been since April.
Though a slowdown in mainland China and concerns over its trade war with the United States continued to weigh on the economy, February saw a slightly milder deterioration of operating conditions. New orders and output declined for the eleventh consecutive month in a row, while employment levels also continued to fall; however, all declined at a marginally slower pace than in January. Lower business volumes in turn weighed on purchasing activity, and stocks of purchases declined at the fastest pace in eight months as firms attempted to maintain only lean inventories to keep costs down.
Finally, regarding price developments, input cost inflation was mild in February, driven by slightly higher wages whereas the prices of raw materials fell in the month, which prompted firms to marginally raise their selling prices for the third month running.
Commenting on this month’s reading, Bernard Aw, principal economist at IHS Markit, noted:
“Companies remained pessimistic about future growth, citing concerns over higher operating costs, labour shortages, greater competition and the US-China trade dispute. The latest reading is consistent with an annual GDP growth rate of 1.6%”.
Author: Joffrey Simonet, Economist