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For a legendary free-market entrepot, Hong Kong is having an awful lot of trouble getting its private sector back into the black.

The Nikkei purchasing managers’ index for Hong Kong’s private sector rose to 49.9 in March, marking a third straight month of falling business activity and coming in just below the 50-point line separating contraction from growth.

While up from February’s level of 49.6, the latest reading brings the first quarter to an ignominious close despite output growth rising – albeit marginally – for the first time since March 2015. Companies also registered fewer new orders, marking the second full year of contraction in new business as staff numbers continued to contract.

While input prices rose for a ninth straight month, prices charged to clients dropped for the second month running. Businesses surveyed cited economic downturn, political uncertainty, increased competition and high rental costs as the basis for broad pessimism in their outlook for the next 12 months.

Copyright The Financial Times Limited 2017. All rights reserved.

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