Hong Kong PMI February 2017

Hong Kong

Hong Kong: PMI retreats further into contractionary territory in February

March 3, 2017

The Nikkei Hong Kong Purchasing Managers’ Index (PMI) released by IHS Markit dipped to 49.6 in February from 49.9 in January, retreating more firmly into contractionary territory after briefly rising above the 50-point threshold that separates expansion from contraction in the business environment in December.

Demand for Hong Kong’s goods and services continued to decline, both in the domestic and external markets, contributing to the PMI’s fall. New orders and output declined in February, as a strong U.S. dollar—to which the Hong Kong dollar is pegged—continued to erode the competitiveness of Hong Kong’s products in overseas markets. Lower demand allowed firms to work through their backlogs of work as excess production capacity built up. Staff levels were cut in February as lower demand took its toll on the labor market. In what amounted to the silver lining of an otherwise dire report, lower inflationary pressures allowed firms to offer price discounts, a boon for businesses struggling to remain competitive overseas.

FocusEconomics Consensus Forecast panelists see fixed investment increasing 2.2% in 2017, which is up 0.2 percentage points from last month’s estimate. For 2018, the panel expects fixed investment to reach 2.2%.

Author:, Economist

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Hong Kong PMI Chart

Hong Kong PMI February 2017

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 IHS Markit.

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