Hong Kong: PMI sinks to over 15-year low in November as business activity deteriorates at unprecedented rate
December 4, 2019
The IHS Markit Purchasing Managers’ Index (PMI) slipped to 38.5 in November (October: 39.3), marking the worst reading since April 2003.
November’s deterioration came on the back of business activity slumping at the fastest pace since contemporary records began and new business falling at the steepest pace in 11 years. Moreover, headcounts declined slightly and backlogs of work dropped steeply. Needless to say, business sentiment remained the lowest on record in November, as many firms expect lower output in a year from now due to ongoing political unrest. On the price front, input prices fell in November, mainly due to a decrease in staffing costs, while output prices also dipped.
Commenting on November’s print, Bernard Aw, an economist at IHS Markit, noted:
“The average PMI reading for October and November combined showed the economy on track to see GDP fall by over 5% in the fourth quarter, unless December brings a dramatic recovery.”
Going forward, political turmoil and the U.S.-China trade war will continue to undermine Hong Kong’s private sector, which is currently undergoing the worst deterioration since the severe acute respiratory syndrome (SARS) epidemic in 2003. With no clear end in sight to either headwind, business investment will likely continue to markedly contract, which could translate in to a significant spike in unemployment.
Author: Steven Burke, Economist