Hong Kong Private Sector Returns to Growth

The S&P Global Hong Kong SAR PMI rose to 50.4 in May 2026 from 48.6 in April, signaling a renewed expansion in private-sector activity after two consecutive months of contraction. Business activity increased for the first time since March, supported by a modest rise in new orders and a solid rebound in export demand, with foreign sales posting their strongest growth in three months. Meanwhile, employment declined slightly as firms chose not to replace departing staff, while backlogs continued to fall, albeit at a slower pace. Purchasing activity expanded at a softer rate, and supplier delivery times lengthened for the first time in three months, partly due to shipping disruptions linked to the Middle East conflict. Cost pressures remained elevated, with purchase prices rising at the fastest pace since December 2021, while firms continued to raise selling prices, though at a slower pace than in April. Business confidence stayed negative but improved to a three-month high.

The S&P Global Hong Kong SAR PMI fell to 48.6 in April 2026 from 49.3 in March, marking its lowest level since June 2025 and signaling a second straight month of contraction in the private sector. Both output and new orders fell again, with output shrinking at the fastest pace in nearly a year. Employment fell for the first time in three months as backlogs continued to ease. Still, foreign orders picked up, even as demand from China softened for the first time in seven months. Buying activity rose modestly, while supplier performance improved amid reports of adequate capacity. Cost pressures mounted, with input price inflation hitting a 14-1/2- year high, driven by higher raw material costs and the ninth straight month of rise in wages. Firms lifted selling prices at the fastest pace since August 2023 to protect margins. Lastly, sentiment remained subdued, though slightly less negative, amid concerns over rising competition and geopolitical risks linked to tensions in the Middle East.

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.