September 3, 2014

The HSBC Purchasing Managers’ Index (PMI) fell from 50.4 in July to 49.6 in August. August’s print represented the lowest level in three months. As a result of the monthly decline, the PMI fell back below the 50-threshold that separates expansion from contraction in business conditions.



August’s figure reflected that business conditions slightly deteriorated, mainly due to decreases in overall output and purchasing activity, while businesses continued to reduce their staffing levels. In addition, new orders from Mainland China fell markedly in August. HSBC analysts pointed out that, “after the weaker-than-expected Q2 GDP data, the August HSBC Hong Kong PMI suggests the economy is still in a cyclical slowdown. The outlook remains uncertain, with new orders contracting for the fourth consecutive month and new business from Mainland China falling again. The slowdown in demand is also affecting the labour market as shown in the sharper pace of job cuts. This will pose risks to unemployment and consumption in H2.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 4.1% in 2014, which is down 0.3 percentage points from the previous month’s estimate. For 2015, the panel expects fixed investment to increase 4.4%.