According to IHS Markit, a London based leading research and consulting firm, its recently released Hong Kong Purchasing Managers Index (PMI) shows that, in the month of August, Hong Kong’s business activity experienced its biggest decline since 2008.
The report pointed to the fact that Hong Kong’s business confidence has dropped to a record low. Pessimism continues to spread in major companies. The IHS Markit’s Hong Kong PMI, adjusted for seasonal fluctuations, fell from 43.8 in July to 40.8 in August, the worst month since February 2009. In general, an index above 50 represents an increase in activity in the private economy, while below 50 represents a decline. The calculation of the index includes statistics on new orders, outputs, employment, suppliers’ delivery time, and inventory purchases.
According to IHS Markit’s PMI index, Hong Kong’s economy has been declining for 17 consecutive months. The number of orders that mainland China placed in Hong Kong has fallen sharply. Almost half of the companies surveyed said that orders from mainland China had decreased. They believe that the Sino-US trade war, the sharp depreciation of the renminbi, and the large-scale demonstrations in Hong Kong are the reasons for the decline in orders from the mainland.
Bernard Aw, an economist at IHS Markit, said the latest survey shows that the Hong Kong economy is shrinking at a rate of 4 percent to 4.5 percent. In August of this year, the output, new orders, and the export volume of Hong Kong companies fell sharply. In the history of the company’s compilation of the PMI index, which is more than 20 years, only the 2003 SARS epidemic and the 2008-09 financial crisis were worse than today.
Even worse, more and more companies surveyed believe that the situation will deteriorate even further in the next 12 months. According to IHS Markit, about one-quarter of companies in July were pessimistic about the coming year; in August one-third of respondents held a gloomy outlook.
Source: Deutsche Welle, Chinese channel, September 4, 2019