PMI hits 51.5 in December amidst upbeat business sentiment

The turnaround was evident in higher levels of client demand and purchasing activity.

Hong Kong’s private sector closed the year on a high note as PMI hits a three-year high in its latest 51.5 reading in December, 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.

Business confidence also turned positive after almost three years of downbeat sentiment which was evident in stronger output increase and renewed growth in order volumes. 

Higher levels of client demand, supported by an increase in Chinese sales, led to higher levels of purchasing activity. Inventory levels were similarly lifted and stocks of purchase rose. 

However, the increased appetite for inputs strained the supply chain as vendor performance dipped. 

Overall, businesses hold positive expectations for the year ahead thanks to improved economic climate in Europe and increased promotional activity. 

“Higher sales suggest that further output growth can be expected in January. Firms continued to raise purchasing activity and inventories in anticipation of higher sales. Employment also rose for the first time in five months,” said IHS Markit principal economist Bernard Aw.