A vendor pulls a trolley down a street of a food market in Hong Kong on May 3, 2021. (PETER PARKS / AFP)
Hong Kong’s private sector business confidence for the 12-month outlook reached a seven-year-high in April, as the Purchasing Manager’s Index registered 50.3, the third consecutive monthly reading above the 50.0 no-change mark, IHT Markit said on Wednesday.
IHS Markit forecasts Hong Kong’s GDP to grow 4.4 percent in 2021
A reduction of COVID-19 cases in the city and the relaxation of social distancing measures contributed to the positive sentiment, IHT Markit said in a press release.
“The positive picture reflected an improvement in the situation regarding the COVID-19 pandemic, and while experience tells us that this could reverse again quickly, firms themselves are at their most confident in more than seven years amid hopes that the pandemic will remain under control and that more people will receive vaccinations,” IHS Markit Economics Director Andrew Harker commented in the release.
Signs of a pandemic recovery and loosening of restrictions also supported business activity. Output in particular expanded, ending a three-year sequence of decline. New orders stabilized during April after falling for three years, data show.
“After facing challenging business conditions over a number of years, there is some light at the end of the tunnel for Hong Kong SAR firms,” Harker noted.
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While the business activity is seeing some improvement, new export orders and new business from the Chinese mainland continued to fall due to the pandemic, preventing more pronounced expansions in output and new orders, the index shows.
Companies in Hong Kong hired extra staff for the third month running in April, while the rate of job creation remained modest and was slightly softer than seen in March. The latest increase in workforce numbers was insufficient to prevent a buildup in backlogs of work, the first time in 38 months.
Purchasing costs inflation increased at the fastest pace in 34 months, backed by higher costs in raw material and staff. However, Hong Kong companies continued to lower their selling prices in April by offering discounts to attract customers amid competitive pressures.
IHS Markit forecasts Hong Kong’s GDP to grow 4.4 percent in 2021. Financial Secretary Paul Chan Mo-po forecast that Hong Kong will see 3.5 percent to 5.5 percent economic growth this year in the 2021-22 budget delivered on Feb 24, with the headline inflation rate and the underlying inflation rate at 1.6 percent and 1 percent respectively.
xinlanzeng@chinadailyhk.com