PMI hits 50.7 in November but business outlook remains gloomy

Total new orders continued its decline this month.

The private sector displayed a slight improvement as the Nikkei Hong Kong Purchasing Managers’ Index (PMI) inches to 50.7 in November from last month’s 50.3, according to IHS Markit.

The Nikkei Hong Kong PMI is a leading indicator of economic health as it gauges business conditions in the private sector.

The latest reading showed a mild improvement as firms stock up in inventory and purchasing activity was one of the fastest for over 16 years, however Markit notes that the figure remains below average.

Higher Chinese orders provided main support to business activity this month but was insufficient to offset declining domestic demand as total new business volumes fell for the second month in a row.

“Furthermore, businesses continued to express pessimism over the outlook in the year ahead. Apart from lower sales, companies continued to face an ongoing squeeze on profit margins, which will, in turn, dampen employment prospects and capital investment growth,” said IHS Markit Principal Economist Bernard Aw.