Hong Kong: PMI posts weakest decline in six months
The IHS Markit Purchasing Managers’ Index (PMI) rose to 46.8 in January (December: 42.1), but remained below the 50-threhold that indicates an improvement in the private sector economy over the previous month. December’s print marks 22 consecutive months of deterioration in Hong Kong’s private sector.
January’s weaker downturn came on the back of a softer fall in new orders, production levels and exports. Moreover, business sentiment increased from the previous month, but remained in the doldrums nonetheless. On the price front, input and output prices fell in January. Despite signs that the manufacturing sector is on the mend, the print was likely flattered somewhat in recent months due to firms’ ability to stoke demand by lowering its output prices.
Commenting on January’s print, Pollyanna De Lima, principal economist at IHS Markit, noted:
“Offering some respite to firms, overall expenses fell further. This enabled businesses to continue with their price-discounting strategies aimed at boosting sales.”
Looking ahead, political turmoil should continue to pummel Hong Kong’s private sector. Moreover, the outbreak of the coronavirus, which has paralyzed economic activity in mainland-China, added the latest blow to the battered economy. That being said, the easing in the U.S.-China trade war could provide some relief to business investment.