Purchases weaken but light at end of tunnel

Business | Agencies and Winnie Lee 6 May 2021

The purchasing managers' index for Hong Kong weakened in April from a month ago amid rising raw material costs that undermine the economic recovery, although banks revised upward their forecasts on economic growth.

The index compiled by consulting firm IHS Markit posted a reading of 50.3 in April following one of 50.5 in March.

But that was the third successive month when marginal improvements in business conditions have been recorded on a figure below 50 at the beginning of the year.

There was also an end to a three-year sequence of declines in output and new orders.

Business confidence also improved to the highest level in more than seven years, and employment increased for a third month running.

The purchasing cost surged at the fastest pace in 34 months.

After facing challenging business conditions over a number of years, there is some light at the end of the tunnel for Hong Kong firms, said Andrew Harker, economics director at IHS Markit.

IHS Markit sees Hong Kong's economy growing 4.4 percent over all of 2021.

The forecast by Standard Chartered Bank (Hong Kong) for Hong Kong's economic growth this year has now gone to 6.9 percent from 3.5 percent previously.

And OCBC Wing Hang Bank also revised upward its forecast for Hong Kong's economic growth this year from 4.1 percent previously to 5 or 6 percent.

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