Hong Kong Private Sector Shrinks for 1st Time in 8 Months

The S&P Global Hong Kong SAR PMI declined to 49.3 in March 2026 from February’s 35-month high of 53.3, marking the first contraction in the private sector since last July, as new orders declined due to the impact of the Middle East conflict. New orders recorded the largest drop in nine months, reversing a five-month streak of strong expansion. Consequently, output and new business also dropped. Foreign sales also saw a similar decline, ending a four-month expansionary period. However, demand from China moved in the opposite direction, rising for the sixth consecutive month, although the rate of increase has slowed. Meanwhile, employment increased moderately. On prices, input cost inflation slowed to the softest pace since September last year, with purchasing prices falling to a seven-month low. Meanwhile, output inflation eased to a five-month low. Looking ahead, business sentiment weakened to its lowest level since last July, due to the Middle East conflict.

The S&P Global Hong Kong SAR PMI rose to 53.3 in February 2026 from 52.3 in January, marking a seventh straight month of improvement and the strongest expansion in business conditions in just under three years. The upturn was driven by sharper increases in output and new orders, with overall sales growing at the fastest pace in three months. Backlogs of work rose for a third consecutive month, with the pace of accumulation the steepest in 12 years, while firms responded by raising employment for the first time in four months, though job creation was only marginal. Purchasing activity also increased sharply, while supplier delivery times lengthened for the first time since November. On prices, input cost inflation eased but remained solid, while output charge inflation climbed to its highest level since October 2023. Looking ahead, sentiment remained subdued despite improving from January, with firms citing intense competition and weak local demand as key concerns.

The S&P Global Hong Kong SAR PMI rose to 52.3 in January 2026 from December’s three-month low of 51.9, signaling a sixth consecutive month of private-sector growth driven by stronger new business inflows. Foreign sales expanded at the fastest pace in nearly three years, while backlogs increased for a second month, with accumulation quickening despite continued job shedding, though marginal. Purchasing activity picked up, while supplier performance improved for the second straight month. On the price front, input costs rose, reflecting higher raw material and labor expenses, though overall input inflation eased. Meanwhile, output prices logged modest acceleration, even as firms offered discounts to spur demand. Looking ahead, business confidence slipped to a five-month low, weighed down by concerns over U.S. trade policy and intensifying market competition.