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Hong Kong: PMI moderates in December

January 6, 2016

The Nikkei Purchasing Managers’ Index (PMI) decreased from November’s 46.6 to 46.4 in December, which marked a three-month low. As a result, the PMI fell further below the 50-threshold that separates contraction from expansion in business conditions.

December’s figure reflected sharper declines in output and new orders, which added to the fall in new business from Mainland China. Nikkei analysts pointed out that, “the recent US interest rate increase has meanwhile impacted the Hong Kong dollar, which is pegged to the greenback, and led the Hong Kong Monetary Authority to follow suit by raising its base rate for the first time in nine years. Though a stronger Hong Kong dollar has helped to reduce import costs, it has eroded the competitiveness of the economy, which relies heavily on exports. Meanwhile, tighter monetary policy at a time of relatively weak demand may lessen the likelihood of an economic recovery in the near term.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 4.1% in 2016, which is down 0.1 percentage points from the previous month’s estimate. For 2017, the panel expects fixed investment to increase 3.2%.

Author:, Economist

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Hong Kong PMI Chart

Hong Kong PMI December 2015

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 Markit.

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