Sometimes a global financial hub just can’t catch a break. And no, we’re not talking about the City.
The Nikkei purchasing managers’ index for Hong Kong’s private business activity came in at 45.5 in June, plunging farther beneath the 50-point mark separating contraction from growth and almost two points below a reading of 47.2 from the previous month.
The sharpening fall is a painful setback after contraction had appeared to soften in May to the slowest pace of deterioration in 13 months.
Overall activity was dragged down partly by a fall in new orders placed at private sector firms, which in June hit their lowest level since August 2015, when the headline gauge also hit a record nadir of 44.4.
Annabel Fiddes, the Markit economist responsible for compiling the survey, said the latest numbers signalled the current downturn had intensified at the end of Q2, with little hope for improvement in the near-term:
Unless there is a marked improvement in customer demand, it seems unlikely that Hong Kong’s private sector will be able to lift itself out of the current downturn. However, given that global economic conditions continued to be dogged by uncertainty, including the recent announcement of Brexit, it’s likely that confidence and activity will fall further in the second half of 2016.
That is discouraging news for Hong Kong, where gross domestic product unexpectedly shrank 0.8 per cent year-on-year in the first quarter.