Hong Kong PMI jumps to 55.2 in January 2011

The current reading is an improvement from the 55.0 posted in December 2010.

According to HSBC the latest figure signalled a marked strengthening of operating conditions in Hong Kong private sector economy.

The bank said improvements have been recorded in each month since August 2009.

Companies in Hong Kong reported a marked rise in incoming new business received during January. The latest expansion in new orders eased slightly from the previous survey period, but remained above the long-run trend. New work intakes received from mainland China increased solidly during January, with the rate of growth broadly unchanged from the previous month.

The rise in overall new business supported a further expansion of output in January. Reflective of the slower increase in new work intakes, the growth in output was also weaker. Nonetheless, outstanding business rose again. The extent to which backlogs accumulated remained sharp in the context of historical data, but was slower than in the previous survey period.

January data signalled a rise in employment in the Hong Kong private sector economy. This was the first increase in staffing levels seen in three months. However, the rate of growth was only marginal, with the majority of panellists indicating that employment was unchanged during the month.

Despite the marked rise in new orders in January, there was a fractional reduction in purchasing activity. Nonetheless, suppliers’ delivery times lengthened markedly and at one of the steepest rates in the series history. Stocks of purchases fell marginally during January, with anecdotal evidence suggesting that longer lead times and higher input costs led companies to utilise existing inventories.

Overall input costs faced by companies in Hong Kong increased substantially during January. Higher purchase prices and salaries drove the rise in overall costs, but the former had the greater impact. However, the rate of input cost inflation slowed since December. Subsequently, output prices also increased during the month, but at a slower pace.

Commenting on the Hong Kong PMI survey, Mark McCombe, Chief Executive of HSBC in Hong Kong, said: “Solid economic growth has led to inevitable inflationary pressures in Hong Kong. We anticipate that inflation in Hong Kong will grow at a faster pace in 2011 than last year, stoked by rising wages and commodity prices. While this issue will remain a reality for Hong Kong in 2011, the Territory's economy continues to gather momentum in the first few weeks of the year, fuelled by robust domestic and global demand.”