Hong Kong business conditions improve but only slightly
Analyst says the economy’s sails have yet to pick up wind even as sufficient new business continues to support job creation.
Donna Kwok, Economist, Greater China Economic Research, HSBC, said: “A marked contraction in Mainland orders underscores that down-side risks to growth remain, especially with Western demand so weak.”
Here’s more from HSBC:
April data signalled only a marginal improvement in Hong Kong private sector business conditions. Although new orders increased for the fifth month running, growth was only slight and the weakest in the current sequence of expansion. Output meanwhile was unchanged from March. Employment in the private sector rose at a slower pace in April, while the overall rate of input price inflation was the weakest since last November.
After adjusting for seasonal variation, the headline HSBC Hong Kong Purchasing Managers’ Index™ (PMI®) – a composite index designed to provide timely indications of changes in prevailing business conditions in Hong Kong’s private sector economy – registered only slightly above the 50.0 no-change mark in April. At 50.3, the PMI signalled only a marginal improvement in Hong Kong private sector business conditions. Moreover, down from 52.0, the latest improvement was below the series trend and the weakest in 2012 so far.
Firms working in Hong Kong’s private sector received a larger volume of new orders in April. Almost 16% of panellists recorded an increase in new work, with a number of firms reporting slightly higher client demand. That said, new orders from Mainland China fell solidly over the month, and at the fastest rate since last November. Overall, total new orders rose only marginally in April, with the rate of growth at a five-month low.
Following three months of increases, output at Hong Kong private sector firms was unchanged in April. Concurrently, the amount of inputs purchased by monitored companies was also broadly unchanged from March. Nonetheless, stocks of purchases were accumulated in April, with respondents generally citing the recent increases in new orders.
Hong Kong private sector companies reported a shortening of suppliers’ delivery times in April. Lead times have decreased in two out of the past three months, but the latest improvement in vendor performance was only marginal.
Employment in Hong Kong’s private sector rose for the second month running in April, with firms attributing job creation to larger new order volumes. However, the rate of employment growth slowed since March and was only marginal overall.
Input costs faced by monitored companies rose solidly in April, despite the rate of input price inflation being the weakest in five months. Firms passed parts of their greater cost burdens on to clients by raising their output charges. That said, average selling prices increased only marginally in April, and at the weakest rate in the current five-month sequence.