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The S&P Global Hong Kong purchasing managers index posted 49.5 in August, down from 51.0 in July, signalling a renewed deterioration in business conditions and marking the first decline since April.
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The decline is marked by output and new orders both falling into contraction, S & P indicated.
At the same time, overall input costs rose at a faster pace in August, contributing to the strongest increase in selling prices for nearly three-and-a-half years.
Private sector firms lowered output for the first time since April, as lower intakes of new work and subdued economic conditions had dampened business activity; making firms increasingly downbeat about the outlook for output, with the degree of negative sentiment the most pronounced in three months.
Average input costs rose in August, with the inflation rate reaching a three-month high, attributed to higher raw material costs; which as a result pushed selling prices up, as shown by a rate of charge inflation fastest since April 2023.
The reduction in total new orders contributed to a further decrease in backlogs of work in August, as firms lowered headcounts for the fifth month in a row.
Overall, expectations were the most pessimistic since May, with concerns on on subdued domestic economic conditions, increased competition and ongoing geopolitical uncertainty linked to the war in the Middle East and US trade policy.
