PMI plunges to 15-year low in November

Business sentiment was also at its lowest since 2012.

Hong Kong’s purchasing manager index (PMI) fell 38.5 in November from October’s 39.3, marking the lowest downturn since the country’s SARS outbreak in 2003, according to a report by analytics IHS Markit.

Business confidence similarly demonstrated one of the lowest levels since business sentiment data was first recorded in 2012. Business activity plunged at a survey record rate, accompanied by the steepest decline in new sales for 11 years. Employment fell amidst a further sharp decline in backlogs of work while firms continued to make deep cuts to input purchases and inventories during the month.

Overall demand for Hong Kong goods and services further declined in the middle of the fourth quarter. Inflows of new business fell at the fastest rate since November 2008, with IHS’ panel members owing the slowdown of demand to ongoing protests and trade tensions. New orders from mainland China shrank for the nineteenth straight month in November and at one of the quickest rates since March 2005. As a result of weak sales, backlogs of work continued to fall at a marked pace which in turn, dampened hiring, with employment declining in November.

Amidst a political crisis and weak global trade conditions, companies remained pessimistic about the business outlook in the year ahead. The Future Output Index, remained among the lowest recorded in the series history, with a large proportion of survey participants expecting lower business activity in one year’s time, stating political protests as a main reason.

In a further sign of pessimism, companies continued to scale back their purchasing activity and input inventories in November, reducing both at a survey-record rate. Despite subdued appetite for inputs, delivery times lengthened for the first time in three months during November.

Overall input costs fell in November, dragged down by the first decline in staff costs for over three years. Meanwhile, purchasing costs dropped sharply, falling at the steepest rate since the start of 2009. Consistent with lower cost burdens, firms discounted selling prices for a fifth month in a row during November.