Hong Kong sees strong rebound as PMI surges to decade high
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HONG KONG'S private sector expanded in May at the fastest pace in more than a decade as the city continues to recover from its deep, Covid-fuelled economic slump.
The S&P Global Purchasing Managers' Index (PMI) rose to 54.9 in May, up from 51.7 in April and the sharpest rate of growth since March 2011. A reading above 50 signals expansion, while anything below indicates contraction.
It's the latest sign of a promising economic rebound for Hong Kong, which in the first quarter slipped into contraction for the first time in more than a year as the city imposed severe restrictions on activity to contain a damaging Omicron outbreak. Retail sales surprisingly rebounded in April, as did exports.
The private sector data suggests Hong Kong's economy is "recovering strongly into the second quarter", said Jingyi Pan, economics associate director at S&P Global Market Intelligence, in a statement accompanying the PMI release.
New order growth accelerated in May, driving hiring and purchasing activity expansion, she said, adding that overall sentiment is positive, "with the latest developments boding well for further improvements in business conditions".
Some challenges remain, though. Cases are starting to tick back up, with the city on Sunday (Jun 5) reporting that infections had reached a 6-week high amid a growing cluster that originated at a group of nightclubs. That's prompted fears that the government could tighten curbs again.
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"As long as the city doesn't dial back the loosening to date, the recovery has sufficient momentum to keep going," said Bloomberg Economics' Eric Zhu in a note published Monday before the PMI data. He pointed out that foot traffic at shops and restaurants are at around the highest level since late January. He expected the recovery to continue in the coming months, supported in part by a recent distribution of consumption vouchers.
Demand from China also remains under pressure, according to Pan.
Beijing's Covid curbs have continued to be a pain point for Hong Kong's economy, as trade with China continued to be hit in April even as overall activity improved. BLOOMBERG
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