PMI hits 48.4 in February as demand and output sink

Output dropped for the eleventh straight month.

Business conditions in Hong Kong’s private sector economy continued to deteriorate as the Purchasing Managers Index (PMI) still hovered below 50 at 48.4 in February, according to IHS Markit. 

Also read: GDP growth may moderate to 2.2% in 2019

“Private sector conditions deteriorated further in February as demand continued to weaken, boding ill for Hong Kong’s GDP growth at the start of the year,” Bernard Aw, principal economist at IHS Markit said in a statement.

The Nikkei Hong Kong PMI is a leading indicator of economic health that gauges business conditions in the private sector. PMI readings below 50 represent an economic contraction.

Also read: Trade war could hit half a percentage point of Hong Kong GDP: official

Total new business shrank in February amidst declines in export orders to China. As a result, output fell for the eleventh consecutive month.Employment also dropped for the fourteenth straight month in February which firms attributed to voluntary leavers.

Overall, the survey notes that the future looks bleak for businesses in Hong Kong as sentiment remains sour amidst challenges in sourcing manpower, heightened competition and the trade dispute.