FX.co ★ Hong Kong Private Sector Contraction Eases

The S&P Global Hong Kong SAR PMI edged up to 49.0 in May 2025 from 48.3 in April, indicating the least severe contraction in private sector activity seen in the last three months. Both output and new orders experienced only slight declines, suggesting a slowdown in the rate of business deterioration. Although export demand remained weak, its decline decelerated, while sales to China leveled off after significant reductions in prior months. For the first time since January, employment levels saw a rise, propelled by hiring in the manufacturing and construction sectors, reflecting a cautious sense of optimism. Supply chains showed further improvement, with vendor performance marking the most significant enhancement in delivery times since April 2023. Purchasing activity moderated, and companies continued to deplete their inventories. On the pricing front, input costs increased at their slowest rate this year, prompting firms to modestly raise their output prices. Looking forward, the sentiment remains subdued due to uncertainties surrounding US trade policy and weak domestic demand.