The seasonally adjusted HSBC Hong Kong Purchasing Managers' Index (PMI) in July was at 49.7, marginally up from 48.7 in June, indicating a further deterioration in operating conditions as it still remained below the 50.0 no-change mark, the company said Monday.
Incoming new work at private sector companies in Hong Kong fell for the fourth consecutive month in July, with firms generally linking the latest decline to weak client demand and fragile market conditions. That said, the rate of contraction slowed to only a marginal pace.
New orders from Chinese Mainland also decreased over the month, although the latest reduction was the weakest in the current six- month sequence.
Employment in Hong Kong's private economy fell for the fifth consecutive month in July. Although the latest round of job losses was solid, it was to a lesser extent than June's 21-month record.
Commenting on the Hong Kong PMI survey, Donna Kwok, Economist, Greater China Economic Research, HSBC, said that Hong Kong's employment conditions are still worsening and merits concern, but sustained salary increases suggests that weakening new business inflows have yet to dent job market conditions in a meaningful way.
"We expect Hong Kong's GDP growth to weaken through 3Q13, but for the pace of decline to be modest and for the city to stay out of recession this year," he said.
The PMI is a composite index designed to provide timely indications of changes in prevailing business conditions in Hong Kong's private sector economy.