Hong Kong's private sector economy has continued its recovery trend. The S&P Global Hong Kong Purchasing Managers' Index (PMI) for June climbed to 52.0, rising further from the previous month's 50.4. This indicates that business conditions have improved for two consecutive months, with the pace of expansion accelerating.
Demand-side performance was positive. New orders received by private enterprises grew for the second month in a row in June. The main supporting factors were the launch of new products, a warming of market demand, and consumer activity driven by the World Cup event. While local demand expanded, orders from both the Chinese mainland and international markets also recorded modest growth. Notably, new orders from the mainland reversed a three-month declining trend, returning to expansion territory.
On the output front, companies continued to expand production, with the rate of output growth reaching a four-month high. Concurrently, order backlogs appeared for the first time in four months, suggesting that capacity pressures are gradually emerging.
However, the employment market has yet to show improvement. Job numbers continued to contract, with the current period of reduction extending to three months. Purchasing activity declined for the first time since last October, reflecting increased caution among businesses regarding future sales prospects. As actual demand fell short of expectations, inventory of purchased items increased compared to the previous month.
Supply-side performance weakened. Supplier delivery times lengthened for the second consecutive month, with the degree of delay being the most severe in nearly a year. Regarding input costs, the overall pace of inflation slowed towards the end of the quarter, but absolute levels remained high. Prices for raw materials rose sharply, and while the increase in purchase prices moderated, it remained robust. Employee cost increases were relatively mild but reached their highest level this year.
To alleviate cost pressures, private enterprises have raised their selling prices for twelve consecutive months. However, the overall extent of these price hikes was limited and represented the smallest increase in three months.
Looking ahead, business operators maintained a pessimistic view of the business outlook, although the degree of pessimism eased somewhat compared to the previous month. Market negativity primarily stems from weak local demand, though some firms hold hope that a reduction in geopolitical tensions in the Middle East could provide support for economic growth.