Hong Kong's January PMI was 47.8, which is still at a contraction level after rebounding from last December

Financial News

Written by: Zhang Weilun

2021-02-03 10:49

The last update date: 2021-02-03 10:49

IHS Markit announced Hong Kong’s January Purchasing Managers’ Index (PMI). The latest is 47.8, which is higher than the 43.5 in December last year, but it is still below 50, which means it continues to shrink.

IHS Markit pointed out that due to the impact of epidemic restrictions and social distancing measures, order demand and business operations have been weakened, and it was the second largest drop since August last year.

In terms of export trade, the relevant index fell sharply in January, which in turn affected local demand.

The decline in export trade was related to the apparent shrinking of orders from the Mainland.

At the same time, companies have also reduced their procurement activities, and companies have reduced their procurement scale due to weak sales. However, the reduction of input purchases by the business is also related to the imbalance of the supply chain.

The survey data in January reflects the shortage of supply and the increasing delays in shipping or other logistics.

In fact, the supplier delivery time index in January recorded the largest drop since the record in 1998, indicating that there is unprecedented pressure on the supply chain.

Due to the increase in raw material costs and freight costs, the input costs of enterprises have risen for four consecutive months, but product prices have been affected by factors such as fierce competition and weak sales, prompting enterprises to offer larger discounts and the downward trend has intensified, and profit margins have been under pressure.

Sales prices in January fell the most since July last year.

In terms of employment, some companies have experienced redundancy. However, the vast majority of companies interviewed pointed out that the number of employees has generally stabilized after a significant reduction in staff in December.

Staff costs recorded the biggest drop in 5 months, reflecting the decline in wages and staff numbers.

Business confidence

Looking ahead to the next 12 months, companies are becoming more concerned about how long the epidemic will continue to disrupt the domestic and export markets. As a result, the proportion of companies with a pessimistic outlook in January has increased year-on-year. However, compared with the first half of last year, business sentiment has emerged due to vaccines. There is a significant improvement.

Chris Williamson, chief business economist at IHS Markit, said that Hong Kong has had a difficult start this year. Local demand and export trade have plummeted, supply has also been delayed, and the new wave of epidemics have damped corporate confidence in the near-term prospects.

However, because of the anticipation that the vaccine will be launched, the business confidence of enterprises is still far higher than that of most months of last year. It is hoped that the business environment for the vaccine launch will return to normal.

Hong Kong Economy