Hong Kong PMI November 2016

Hong Kong

Hong Kong: PMI surges to 20-month high in November

December 5, 2016

The Nikkei Hong Kong Purchasing Managers’ Index (PMI) released by IHS Markit rose to 49.5 in November, which was markedly above October’s 48.2 and the best reading since March 2015, when the index fell below the 50-threshold that separates contraction from expansion in business conditions.

The reading showed that operating conditions in Hong Kong deteriorated at the slowest pace in over a year in November. Volumes of output and new orders continued to decline, but both saw a milder decrease compared to October. Notwithstanding lower workloads, firms increased their staffing levels for the first time since March 2014, partially driven by company expansions. An increased workforce and reduced new orders allowed companies to work through their backlogs of work as well as to reduce their input buying. Despite the latter, pre-production stocks rose notably in November, as the reduction in demand outstripped that of inventory purchasing. Lower demand also enabled firms to improve their average delivery times. Regarding prices, businesses in the island saw another month of higher input costs, the result of strong wage growth and increasing raw material prices. Firms, however, managed to roll over these costs onto consumers in a bid to protect their margins.

Regarding the surprising uptick in staffing levels, Bernard Aw, Economist at IHS Markit, stated that, “The good news was an unexpected increase in employment, which was the first seen in 32 months, despite persistently weak business activity. Nonetheless, it is unlikely that the private sector will recover from the current downturn any time soon, given new property cooling measures and a soft global economic environment.”

FocusEconomics Consensus Forecast panelists see fixed investment falling 1.0% in 2016, which is unchanged from last month’s estimate. For 2017, the panel expects fixed investment to rebound and increase 1.9% which is XX from last month’s forecast.


Author:, Economist

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Hong Kong PMI November 2016

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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