Hong Kong Private Sector Health In Worst Shape Since May 2009
Our recent discussion on the four potential catalysts for a 'crash landing' in China seems to have been quite prescient as Markit Economics reports tonight that HSBC Hong Kong's PMI experience another month of deteriorating operating conditions as demand contracted further and the consensus outlook became increasingly downbeat. On the heals of JPMorgan's earlier downgrade of global growth to only 1.7% annualized for the next three quarters and HSBC's cutting of Asia Ex-Japan GDP growth expectations, citing Europe's financial stress as already taking a toll on growth and the US economy remaining 'decidely lackluster', things appear to be weakening rapidly (as output fell at the fastest rate in just under 2.5 years).
Most notably we highlight the fact (from the Markit report) that:
"New order growth from Mainland China was insufficient to overcome declines in domestic and foreign demand for Hong Kong’s goods and services. New business from the Mainland grew at the slowest rate for a year."
With the key points from the report:
- Operating conditions deteriorate for second successive month
- Output contracts at quickest rate in just under two-and-a-half years
- Cost pressures remain strong despite weaker market conditions
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