Hong Kong's private sector activity deteriorated at the sharpest pace in more than six years in August, as output and new orders continued to fall strongly, results of a survey by Nikkei and Markit Economics showed Friday.
The Nikkei Purchasing Managers' Index, or PMI, for the private sector, fell to 44.4 in August from 48.2 in July. Any reading below 50 indicates contraction in the sector.
It was the sixth successive monthly downturn in overall operating conditions. Furthermore, the degree to which the health of the sector deteriorated was the sharpest since April 2009.
New business received by the private sector decreased further in August, as weaker economic conditions had weighed on client demand. Moreover, the rate of contraction quickened to the steepest recorded in 75 months.
Demand from Mainland China also fell markedly in August, marking the sharpest reduction since December 2008.
Weaker client demand resulted fifth successive monthly decline in output, with the rate of contraction accelerating to a 77-month record.
Companies reduced their staffing levels again in August, as part of cost-cutting initiatives. The rate of job shedding intensified since July to the sharpest recorded since April 2003.
On the price front, input prices fell for the second month running in August, helped by lower purchasing costs. Selling prices also dropped during the month, albeit marginally.
"It seems unlikely that the performance of the sector will improve unless demand conditions pick up, as further cuts to output, staff numbers and purchasing activity suggest that the sector will remain in contractionary territory at least in the near-term," Annabel Fiddes, Economist at Markit, said.
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