In October, Hong Kong's private sector experienced a turnaround, registering growth after a stagnant September. The purchasing managers index (PMI) for October reached 52.2, marking an increase from September's 50.0, thereby surpassing the pivotal mark that differentiates growth from contraction. The recent uplift in business conditions is attributed primarily to an improvement in demand.
New incoming orders observed their fastest growth in a year and a half, largely due to stimulus measures from mainland China and a resurgence in tourism. Unlike many regions, the special administrative region of Hong Kong sees the compilation of a single PMI for its entire economy, rather than segregated PMIs for manufacturing and service sectors.
However, local companies reported encountering supply-side challenges in October, experiencing further declines in vendor performance. Supply shortages and shipping delays resulted in longer lead times for both materials and products. Despite these challenges, employers in Hong Kong noted a slight dip in payroll figures for October, primarily a result of resignations and the decision not to replace departing employees.
Moreover, while businesses faced escalating input costs, many chose to maintain their prices to bolster sales. Cautious optimism prevailed among Hong Kong's business leaders following a promising October, although overall sentiment remained pessimistic, albeit at a near one-year low. This tempered pessimism reflects a slight easing of concerns regarding the economic outlook.
The Hong Kong PMI is derived from survey responses gathered from 400 private-sector companies between October 10 and October 28..