Private sector activity continues to shrink in Oct
Operating conditions in Hong Kong’s private sector economy deteriorated again in October albeit at a slower pace compared with previous months, according to a HSBC survey of purchasing managers.
The HSBC Hong Kong Purchasing Managers Index climbed to 49.0 in October from 45.9 in September, the report released on Thursday shows.
A reading above 50.0 indicates expansion, while below signals contraction. The October data was the third consecutive monthly contraction.
Although October PMI stayed below the 50-neutral mark, the close to neutral level “signaled that the deterioration in the overall operating conditions for Hong Kong’s business was marginal,” Donna Kwok, Greater China economist at HSBC commented, adding that the October reading was underpinned by modest contractions in business activity, new orders and employment.
Private sector companies operating in the city continued to reduce their backlogs of work last month, as domestic and foreign demand remained subdued. The sub-index rose to 49.4 in October from 45.5 a month earlier.
New orders – another sub-index that tracks overall new business the city received – increased to 49.3 in October from the previous 44.5. It was driven in part by new mainland business, which stepped up to 51.1 from 50.5 the month before, after it slowed during the previous two months, according to the report.
“Activity is still cooling in response to weakening Western demand, but with the mainland’s manufacturing sectors back in expansion mode, mainland demand should start to provide a thicker buffer against global economic uncertainty going forward,” said Kwok.
The employment reading strengthened to 49.1 in October from 47.5 in September. It is in line with the overall worsening in operating conditions, and a number of panelists also reported voluntary staff resignations last month, according to the report.
In a study released this week, Hang Seng Bank said it believes more signs of moderation will emerge and estimated growth below 5 percent for the third quarter and less than 4 percent for the fourth quarter.
“While Hong Kong may well fall into a technical recession, what really matters is whether the economy is heading for a significant decline in economic activity for a prolonged period,” Hang Seng Bank economists Ryan Lam and Joanne Yim wrote in the report.
Although rising downside risks are increasing, the bank said it does not envisage a full-fledged recession unless the situation in the major advanced economies deteriorates substantially, adding that it still expects GDP growth to average 5.2 percent for full-year 2011.
On Tuesday, Deloitte said it will maintains its forecast of 6 percent GDP growth in Hong Kong this year.
The global accounting firm nevertheless estimates the government will earn HK$10 billion less in stamp duty and HK$5 billion less in revenue for the last six months of this fiscal year, compared with the period of October 2010 to end-March 2011, citing deterioration of the economic environment in the city.
Financial Secretary John Tsang said last month that he also expected the city’s economic growth to ease to around 4 percent in the third quarter from a year ago due to waning exports and uncertainties in the global economy.
Tsang also expects the city’s GDP growth to reach 5 percent this year, at the lower end of the official forecast of 5 to 6 percent.
litao@chinadailyhk.com
China Daily
(HK Edition 11/04/2011 page2)
http://www.chinadaily.com.cn/hkedition/2011-11/04/content_14034202.htm