Hong Kong: Private sector PMI edges up in September
October 7, 2020
The IHS Markit Hong Kong SAR Purchasing Managers’ Index (PMI) rose to 47.7 in September from 44.0 in August. That said, the PMI remained below the critical 50-threhold, suggesting that operating conditions in the Hong Kongese private sector deteriorated for the 30th consecutive month in September.
September’s improvement was largely driven by a softer decrease in both output and new business, amid the easing of some of the pandemic-related restrictions, including the length of operating hours permitted. That said, backlogs of work continued to shrink, partly reflecting a continued decline in export sales. On a more positive note, firms increased their staffing levels at the fastest rate in six-and-a-half years in September. On the price front, input costs remained broadly stable while output prices fell at the softest rate in over a year. Lastly, businesses confidence rose to a 15-month high, although it remained firmly negative amid lingering uncertainty.
Commenting on the result, Bernard Aw, principal economist at IHS Markit, said:
"Hong Kong's private sector moved closer towards stabilisation at the end of the third quarter. […] Nevertheless, the average PMI for the third quarter was only modestly higher than the second quarter: a rise from 43.5 to 45.4, hinting that the Hong Kong
economy will continue to face formidable challenges in the months ahead. The uncertainty surrounding the pandemic trajectory remains a key concern in the absence of an effective vaccine."
Author: Almanas Stanapedis, Economist