Hong Kong Output Growth Hits 5-month High in August
August data signalled a further expansion of Hong Kong’s private sector, although the overall rate of growth was only marginal.
Output increased for the second month running and to the greatest extent since March, despite the level of incoming new business being unchanged from July. Nonetheless, firms reduced their workforces further, with the latest round of job losses moderate overall. Input prices meanwhile increased in August, albeit marginally, and output charges were broadly unchanged from one month previously.
Donna Kwok, Economist, Greater China Economic Research, HSBC, said: “Hong Kong is still putting up a good fight against slumping European demand and a sluggish Mainland turnaround. New product launches helped to stabilise business inflows from China for the first time in five months, as positive wage growth continued to underpin domestic demand. All these factors support our view that Hong Kong should escape recession in 2012.”
After adjusting for seasonal variation, the headline HSBC Hong Kong Purchasing Managers’ Index (PMI) posted above the 50.0 no-change mark for the second month running in August, suggesting a further improvement in
underlying business conditions. At 50.5, up slightly from 50.3 in July, the PMI was the highest in five months, but nonetheless indicated only a slight improvement overall.
Private sector output increased for the second month running in August, with approximately 16% of firms reporting higher activity levels than in July. Moreover, the rate of growth was the strongest in five months.
The volume of new orders received by monitored companies was unchanged from that reported in July. The flat trend in total new business partly reflected a stabilisation in new work intakes from Mainland China, following a four-month period of decline.
Private sector firms reduced their workforces for the fourth consecutive month in August. Anecdotal evidence attributed job losses to recent staff resignations. Overall, the latest reduction in staffing levels was moderate, but the strongest in three months.
The quantity of inputs bought by companies fell further during the latest survey period, with the reduction
largely linked to flat new orders. That said, input inventories rose at the strongest pace since March 2011.
Suppliers’ delivery times meanwhile lengthened for the fourth consecutive month in August. Moreover, the latest increase in input lead times was to the greatest extent in nine months.
In contrast to the marginal reduction reported in July, overall input costs faced by companies increased in
August. Both purchases prices and salary bills rose over the month. However, the rate of input price inflation was only marginal and slower than the long-run series average. Average selling prices meanwhile were broadly unchanged from one month previously, with the vast majority of respondents (approximately 89%)
reporting no change in output charges.