Hong Kong's PMI up to 49.7 in December

HSBC said on Thursday its Hong Kong Purchasing Mangers' Index (PMI), a composite indicator designed to reflect changes in business conditions in the city's private sector economy, posted 49.7 in December, up from 48.7 in November, noting a rise for the first time over the past five months. The figure represented the weakest deterioration in the operating conditions faced by Hong Kong's private businesses since the current sequence of sub-50 PMI readings began in August, said the HSBC in a statement released in the day. In an attempt to limit the impact of slow new order growth on output, businesses in Hong Kong depleted outstanding business at a solid rate during December. While the pace of decline in backlogs of work decelerated, it remained solid. The rate at which output was reduced slowed from November, to only a marginal pace. Nevertheless, the decline in activity extended the current period of contraction to five months. New orders received by businesses in Hong Kong increased during December for the first time since July. However, the rate of growth was only marginal. New business from the mainland declined solidly over the month, albeit at a slower pace than in November. With new order volumes signaling only weak demand, firms in Hong Kong reduced employment at a marginal rate over the month, said the HSBC. Costs increased at a strong overall rate during the latest survey period. Data suggested that inflation of purchase prices and staff costs accelerated, and were broadly in line with their long-run averages, said the HSBC. "Although Hong Kong's economy has come off the boil, it's still simmering. Overall demand strengthened in December, helping to offset continued softness in the mainland activity, with the PMI rising to a level just below 50," said Donna Kwok, economist of Greater China Economic Research, HSBC. "Headwinds from both the trade and financial channels may slow growth in 2012, but provided the central government's stimulus measures feed through, the city should strike a healthier balance between inflation and growth," Guo added.