Hong Kong’s economy has shown signs of stabilisation, as reflected in two studies released yesterday, despite the International Monetary Fund’s (IMF) decision this week to revise down its global economic growth forecast.
The Nikkei Hong Kong Purchasing Managers’ Index, compiled monthly to gauge the city’s private sector business conditions including retail, construction, manufacturing and services, rose to 49.3 last month from 49 in August. The index reading marked the slowest contraction in the past 18 months.
A PMI figure of above 50 means the economy is expanding, while one under 50 indicates a contraction.
Markit economist Annabel Fiddes said: “September saw an encouraging upturn in purchasing activity and a further rise in inventories to signal that companies may have become more upbeat about growth prospects in the coming months.”
The report showed purchasing activity rose for the first time in more than two years, a result of increased inventories of pre-production items.
The report was released a day after the IMF cut its global economic forecast by 0.1 percentage point for this year to 3.1 per cent, and made a similar revision for next year. It estimated China’s push to switch its economic engine away from investment and towards consumption and services would drag its growth down to 6.6 per cent this year and 6.2 per cent next year.
HSBC’s greater China economist Julia Wang is wary of the weak external and domestic demands, adding there will unlikely be any sharp turnaround in growth at least in the near term.
“Domestic demand remains lacklustre, as evidenced by the weak retail sales readings, and the uncertainty in the property market could weigh further on private consumption,” she said. “External demand too remains sluggish. Demand from China, a key source of business for Hong Kong’s companies, also saw further moderation over September.”
Meanwhile, the University of Hong Kong’s Institute of Economics and Business Strategy yesterday upgraded its forecast on the city’s real gross domestic product by 0.3 percentage point to a 1.5 per cent growth this year. It means the growth would decline from last year’s 2.4 per cent.
