HSBC PMI figures show better times back in town in November Private sector business conditions in Hong Kong improved further in November, with a benchmark index posting the biggest increase in nine months, according to HSBC's latest survey on purchasing managers. The HSBC Hong Kong Purchasing Managers' Index (PMI), designed to provide timely indications of changes in prevailing business conditions in the city's private sector economy, rose to 52.2 in November from 50.5 in October. The reading comes only a few days after the National Bureau of Statistics released China's official manufacturing PMI, which indicated that it also rose to a seven-month high of 50.6 in November from 50.2 in October. A PMI reading above 50 indicates expansion of the sector. Hong Kong's November headline PMI stayed above the 50-mark for a second month running and the reading is above its average 51.1 level over the review period. According to the survey, the volume of new business received by private sector firms in Hong Kong saw its first month-on-month rise since July; the total new order growth was solid and the fastest in nine months. Demand from the mainland rebounded up to a 15-month high. Not only did mainland orders rise for the first time in three months, but it also did so at an above long-term trend rate as well, the survey shows. "New business inflows from China are finally starting to recover, while the key underpinnings of Hong Kong's domestic demand resilience remain firmly in place," Donna Kwok, Greater China economist at HSBC, said in a research report. Reflective of the rise in new business, output expanded strongly, with one-in-five surveyed firms reporting higher activity levels since October, with the overall growth rate strengthening to a nine-month high. Meanwhile, the rate of backlog accumulation was the fastest since March. A sharp rebound in mainland demand also contributed to faster job creation and wage growth last month, Kwok said. Employment rose again at an above-trend pace of 51.2, its fastest pace in 10 months. Around 4 percent of respondents stepped up hiring from October in order to meet higher business demands. Tightening job market capacity pushed staffing costs to a 13-month high, the survey shows. She pointed out that the new product launches and solid demand continue to underpin positive business conditions in Hong Kong, setting the economy on course for further expansion in the fourth quarter of this year. "Hong Kong's economy continues to power ahead, thanks to strong domestic demand, as well as recovering mainland demand." However, an improving growth outlook will inevitably be accompanied by a return of inflationary pressures, Kwok warns. The survey shows that the total input costs rose further in November, with both purchase prices and salary bills having increased since October. Overall, the inflation rate was strong and the fastest in eight months. Firms passed on greater cost burdens to clients by raising their selling prices in the latest survey period. "The above trend print for both November's input and output prices confirm our view that the Hong Kong's CPI is back on the up trend," she said, adding that as a result, HSBC continues to expect inflation to inch back up towards 4 percent by year-end, on the back of a Greater China recovery consolidation. Source: http://www.chinadaily.com.cn/hkedition/2012-12/06/content_15990460.htm
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