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Hong Kong's PMI down in Nov. amid worsening private sector conditions: HSBC

(Xinhua)

19:23, December 05, 2011

HONG KONG, Dec. 5 (Xinhua) -- HSBC said on Monday its Hong Kong Purchasing Mangers' Index (PMI), a composite indicator designed to reflect changes in business conditions in the region's private sector economy, posted 48.7 in November, slightly down from 49 in October, noting a fourth successive month in which operating conditions deteriorated.

The health of the economy worsened as output, new orders, and employment all declined, and new business from the mainland contracted over the month, said the company in a statement released in the day. Meanwhile, with demand waning, output prices were reduced despite the continued rise in input costs.

New business received by businesses in Hong Kong contracted at a marginal rate over the month, said HSBC. The decline in new orders was the fifth in the last six months, and was in part driven by weaker demand from the mainland.

Order books from the mainland declined over the month for only the second time since June 2009. Furthermore, the marked pace of contraction was the quickest for 32 months.

With new order volumes signaling a contraction in demand, firms in Hong Kong reduced output prices in an attempt to stimulate sales. November was the first month in which a decline in factory gate prices has been recorded since October 2009.

Meanwhile, input prices continued to rise, albeit at a slower pace. Purchase price inflation eased notably over the month, but remained strong, as many panelists cited further increases in the costs of raw materials. Following a similar trend, salary inflation slowed to its lowest for two years.

"While business activity in Hong Kong is still slowing, it hasn't collapsed," said Donna Kwok, HSBC Greater China Economist. " With the job market and domestic demand holding up better than during the last downturn of 2008 and 2009, the city's growth fundamentals are in stronger shape than before."

"With the mainland still digesting the full impact of the recent tightening measures, activity in Hong Kong will likely cool further, which will help keep a lid on inflationary pressures," Kwok added.

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