Commuters travel past commercial buildings on a tram in the Central district of Hong Kong on June 21, 2021. (ANTHONY WALLACE / AFP)
Hong Kong’s private sector showed a positive performance for the fifth consecutive month in June, as improving economic conditions gave a boost to businesses amid the stabilization of the COVID-19 situation.
IHS Markit Hong Kong’s Purchasing Manager’s Index (PMI) in June dipped to 51.4, falling from 52.5 in May, which demonstrated a good performance for Hong Kong’s business conditions although the growth softened, according to a report released on Tuesday by business information provider IHS Markit.
The report released on Tuesday by IHS Markit indicated Hong Kong has experienced its fifth successive month of positive performance in business conditions, and a third straight month with an increase in both demand and output
IHS Markit interviewed purchasing managers from about 400 private sector companies in Hong Kong from the sectors of manufacturing, construction, wholesale, retail and services.
The report indicated Hong Kong has experienced its fifth successive month of positive performance in business conditions, and a third straight month with an increase in both demand and output. However, the pace of growth for Hong Kong’s private sector slowed in June amid price pressures.
A decrease in the output and new-order indexes contributed to the lower PMI, the report added. It also showed that foreign demand weakened amid new COVID-19 cases in the countries where overseas customers are located, which led to the drop in the overall demand.
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“Broadly, private sector firms remained optimistic with regards to output in the next 12-months in June, which is a positive sign. IHS Markit forecasts (Hong Kong’s) gross domestic product (GDP) to grow 6.8 percent in 2021,” said Pan Jingyi, IHS Markit’s economics associate director.
Price pressure remains because of wage inflation, as well as increased purchasing costs led by a shortage of raw materials, shipping delays, and labor constraints.
“The trend with accelerating wage inflation amid lower employment levels indicated potential hiring constraints,” Pan said. “It is a phenomenon we have likewise observed in other parts of the world through the PMI surveys.”
Meanwhile, Singapore-based United Overseas Bank lifted its forecast on Hong Kong’s full-year GDP from 5 percent to 6.7 percent, based on the city’s stronger-than-expected economic data for the first quarter this year, and the pick-up of the city’s vaccination program.
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“While the vaccination program is on track, we are still mindful of the challenges that the economy is facing, such as the weak labor market and decline in median household income, which will impede a stronger consumption rebound this year,” said Stephen Li, UOB’s head of global markets for Greater China.