Hong Kong PMI declines to 49.3 in March amid tensions in the Middle East

The S&P Global Hong Kong purchasing managers index fell from 53.3 in February to 49.3 in March, dropping below the critical 50-point threshold, amid continued tensions in the Middle East region.

It marks the first time it has weakened since August last year, indicating Hong Kong's private sector business conditions deteriorated.

Both output and new orders for Hong Kong's private sector have been contracted in March, a contrast to the robust growth seen in the first two months of the year, as the conflicts in the Middle East have impacted market demand. 

S&P Global noted that weakened customer confidence and reduced spending power have put pressure on both local and export orders, but sales from mainland China continue to expand.

Meanwhile, the pace of purchasing activity accelerated to the fastest rate in three years, driven by companies launching new projects, continuous order growth for several months, and advance purchasing of materials in anticipation of significant price increases from suppliers due to the war.

Regarding the business outlook, firms reported the worst pessimism since July last year, with some surveyed companies believing that the conflict in the Middle East is having a global impact.