Business conditions in Hong Kong improving at fastest rate in last three years, according to key survey results
Nikkei Purchasing Managers’ Index records bump off the back of increased mainland demand, but sounds note of caution over looming US interest rate hike
Hong Kong’s private sector grew at its fastest rate in nearly three and a half years last month due to greater demand from across the border, though the prospect of higher interest rates is still causing pessimism at companies, a key economic indicator has shown.
The Nikkei Hong Kong Purchasing Managers’ Index (PMI), compiled monthly to gauge sentiment in the city’s private sector, using questionnaires sent to more than 300 companies, rose from 51.1 in June to 51.3 last month.
A PMI figure above 50 indicates private sector activity is expanding, while a sub-50 score indicates contraction.
Although the monthly index rise was just 0.2, the latest reading was the strongest in almost three and a half years. Of the 29 months from March 2015 to last month, 24 saw scores under 50.
“The latest PMI reading was the best in nearly three-and-a-half years, reflecting stronger growth in both output and new orders. Especially encouraging was a further increase in export sales to China. A stronger yuan partly contributed to higher export growth,” said Bernard Aw, principal economist at IHS Markit, which runs the survey.
“However, business sentiment became more negative despite improving demand. Companies remained concerned about a still-weak economic climate, anticipation of higher US interest rates, rising prices for raw materials and greater competition. That may limit the sustainability of the current upturn.”