Hong Kong Private Sector Expansion Eases

The S&P Global Hong Kong SAR PMI fell to 51 in July 2026, from a four-month high of 52.0 in the previous month. Still, it remained in expansion territory for a third consecutive month as output growth accelerated to its fastest pace in five months. New orders also continued to expand for a third straight month, though softer overseas demand led to slower overall sales growth than in June. Meanwhile, firms continued to trim headcounts, with employment declining at the sharpest rate in three years as businesses sought to contain costs. On the pricing front, inflationary pressures softened, with input costs rising at the slowest pace since March, while output price inflation also eased at the start of the third quarter. Looking ahead, business confidence deteriorated, with companies turning more pessimistic about the year-ahead outlook amid concerns over domestic economic environment and inflationary pressures.

The S&P Global Hong Kong SAR PMI increased to 52.0 in June 2026 from 50.4 in May, marking a second consecutive month of expansion in private-sector activity. It was the strongest growth in the private sector since February, supported by stronger upturns in output and new orders. New orders grew for the second straight month, driven by improving demand and greater spending during the World Cup. However, employment continued to fall, with the pace of job shedding remaining marginal. Firms also lowered their purchasing activity for the first time since last September amid concerns over the outlook for sales, while delivery times lengthened due to supplier shortages and shipping delays. On prices, input costs rose, driven by higher raw material prices. However, input cost inflation eased from the previous month. As a result, firms raised selling prices, partially passing on higher costs to customers. Finally, business sentiment weakened due to subdued local demand.

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.