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Hong Kong PMI February 2022

Hong Kong: PMI records worst reading since April 2020 in February

The IHS Markit Purchasing Managers’ Index (PMI) came in at 42.9 in February, down from January’s 48.9. February’s result marked the worst reading since April 2020. Consequently, the index remained entrenched below the 50.0 no-change threshold, signaling a sustained deterioration in business conditions from the previous month.

The downturn was driven by a notable rise in Covid-19 cases during the month and a corresponding tightening of restrictions. Looking at subsectors, output, new orders, and foreign demand fell at sharper rates in February—with demand from mainland China likely affected by rising Covid-19 cases there. That said, input price inflation eased in February, with output prices declining amid subdued demand. Finally, business confidence fell to an over one-year low due to concerns over the pandemic.

Commenting on the latest PMI reading, Jingyi Pan, an economist at IHS Markit, noted:

“The latest Omicron wave can also be seen weighing on Hong Kong SAR private sector firms with increased supply disruptions and pressure on margins, as some firms opted to offer discounts on selling prices to sustain sales. The trickle-down effect on workers was also apparent through the decline in employment levels and wages. The latest Hong Kong SAR Budget offers some relief pertaining to the impact of the Covid-19 restrictions, although GDP growth is still expected to be affected. IHS Markit forecasts for Hong Kong GDP to expand by 2.3% in 2022.”

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