Hong Kong: PMI returns to expansionary territory in April
May 5, 2017
The Nikkei Hong Kong Purchasing Managers’ Index (PMI) released by IHS Markit climbed above the 50-point threshold for the first time this year in April, rising from 49.9 in March to 51.1. April’s print suggested that the territory’s private sector returned to expansion in April following three months of contraction. This was only the second month in more than two years that the Nikkei PMI recorded an expansion—following December’s brief jump to 50.3—and marked the strongest reading in 38 months.
Improvement in April was due to a rise in new orders and growth in output. Higher volumes of new business were recorded on the back of stronger global growth, although Chinese demand for Hong Kong products continued to decline—albeit at a slower pace in April. Employment was broadly stagnant in the month as a result of excess capacity, while backlogs were cleared at the slowest pace in nearly two years. Despite an uptick in inflation, firms cut prices in an effort to clear inventory and remain competitive. Although business confidence remained downbeat, April’s expectations for future output were the most optimistic since June 2015.
Author: Christopher Thomas, Economist