A vendor (R) wears a face mask, as a precautionary measure against the COVID-19 coronavirus, as she places items in a bag for a customer at her fruits and vegetables shop in Hong Kong on April 21, 2020. ( ANTHONY WALLACE / AFP)
Hong Kong’s private sector economy contracted at a slower pace in May, although business sentiment remained weak due to uncertainties over the long-term impact of the coronavirus pandemic, an IHS Markit survey showed on Wednesday.
The seasonally adjusted IHS Markit Hong Kong Purchasing Managers’ Index (PMI) rose to 43.9 in May from 36.9 in April, its highest in four months
The seasonally adjusted IHS Markit Hong Kong Purchasing Managers’ Index (PMI) rose to 43.9 in May from 36.9 in April, its highest in four months. That said, by remaining below the 50 level, the latest reading still indicates a continuing decline in private sector business activities.
"The Hong Kong SAR private economy remained mired in a downturn during May, though the PMI survey showed signs that the economic decline is bottoming out as parts of the economy reopened,” said Bernard Aw, principal economist at IHS Markit.
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The coronavirus health crisis continued to weigh on the city’s private sector economy, but the easing of some social distancing measures helped to support business activity at some companies, the survey said.
As economies reopened and economic activities resumed, the PMI globally –especially on the Chinese mainland and in the Hong Kong special administrative region– showed signs of recovery, said Linus Yip Sheung-chi, chief strategist at First Shanghai Securities.
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The Chinese mainland’s Caixin service PMI showed today that the mainland service sector returned to growth in May for the first time since January, jumping to 55 in May from 44.4 in April, as domestic demand rebounded.
Yip said business recovery in the mainland also helps to drive Hong Kong’s business activities. However, as the pandemic has not been fully controlled in Europe and the US, the external economic impetus has yet to recover and the further expansion of Hong Kong’s private economy remains uncertain.
Firms were slightly less pessimistic about the year-ahead outlook during May than in April, with confidence rising to a four-month high, the survey showed. However, overall sentiment remained weak, with panelists highlighting concerns over the longer-term impact of COVID-19 on economic activity.
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The HKSAR government extended an eight-person limit on group gatherings for two weeks until June18 after the city recorded new COVID-19 cases. In addition, the mandatory quarantine order for travelers from the Chinese mainland, Macao and Taiwan will be extended to July 7 while that for overseas arrivals will be extended by three months through Sept 18.
Gary Ng, an economist at French investment bank Natixis said the extended rules to curb the spread of coronavirus may affect the pace of the city’s economic recovery. Against the backdrop of external headwinds, he said Hong Kong’s PMI may not be able to reach the expansion range within this year.
Hong Kong's Center for Health Protection reported on Tuesday six more COVID-19 cases, taking the total number of confirmed cases in Hong Kong to 1,093.
With inputs from Xinhua
