Hong Kong’s private sector sees slight deterioration in business conditions

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5th March 2024 – (Hong Kong) The latest Purchasing Managers’ Index (PMI) data for Hong Kong indicates a marginal contraction in the business environment for the second consecutive month. Seasonally adjusted figures for February show a decrease from January’s 49.9 to 49.7, reflecting a continued but slight downturn in the operating conditions facing the private sector.

The drop in the PMI is primarily attributed to the decline in new orders, including export sales, which has led companies to scale back their business activities and adopt a cautious outlook for future operations. Despite the contraction, there was a noticeable acceleration in the clearance of backlogged work due to a modest expansion in employment this month.

The volume of new orders received by Hong Kong’s private enterprises fell for the second month running, marking the sharpest rate of contraction since October of the previous year. When dissecting the sources of these orders, both exports and those coming from mainland China exhibited a sustained decrease during the early part of the first quarter. Survey data highlighted increased competition, a downturn in market conditions, and a reduction in client numbers as contributing factors to the tightening of new business.