Hong Kong: PMI sinks to eight-month low in December
January 4, 2021
The IHS Markit Hong Kong SAR Purchasing Managers’ Index (PMI) dived to 43.5 in December, from 50.1 in November, marking the worst result since April 2020. As a result, the PMI slumped below the critical 50-threshold, suggesting that operating conditions in the Hong Kongese private sector plunged into a sharp contraction at the end of last year.
December’s downturn came amid faltering demand conditions as further waves of the pandemic prompted the tightening of containment measures at home and abroad. Both output and new business plunged at the sharpest rates since April, as restrictions dealt a blow to business activity amid dented consumer demand and disrupted supply chains. In turn, job shedding was the fastest since April’s nadir. With regard to prices, while input costs rose at the joint-fastest rate in two years fueled by higher prices for raw materials, firms continued to cut output charges to attract new sales. On a more positive note, pessimism level among firms eased to the lowest since June 2019, chiefly thanks to encouraging vaccine news.
Commenting on economic prospects in 2021, Bernard Aw, principal economist at IHS Markit, said:
“While the December data add to the economic gloom of 2020, companies grew less downbeat about prospects for the year ahead, with hopes pinned on the encouraging recent news of vaccine developments. However, the severe downturn signalled by the latest PMI data underscores how the economic situation may yet deteriorate further amid the rising wave of infections before improvements are seen."
Author: Almanas Stanapedis, Research Team Manager