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Thursday, February 5, 2015, 09:08

Private sector feels the blues as jobs hit five-year low

By Celia Chen in Hong Kong
Private sector feels the blues as jobs hit five-year low
Although Hong Kong’s Purchasing Managers’ Index slid in January on sluggish market demand, the unemployment rate has stayed at 3.3 percent, indicating a stable labor market. (Brent Lewin / Bloomberg)

Private business in Hong Kong had a disappointing start to 2015, suffering the strongest reduction in staff numbers in five-and-a-half years, the HSBC Hong Kong Purchasing Managers’ Index (PMI) showed.

The PMI contracted to 49.4 in January from 50.3 in December 2014, a sign of renewed deterioration in operating conditions, with both output and employment declining at the start of the year.

HSBC Hong Kong PMI is a composite index designed to indicate changes in business conditions in the SAR’s private sector economy through 12 sub-indexes. A PMI reading below 50 indicates a contraction in manufacturing, while a figure above that indicates expansion.

The data show that both output and employment declined, while new business growth slowed to a fractional pace, contributing to a solid fall in purchasing activity at the start of 2015.

“Hong Kong’s economy remains relatively subdued at the start of 2015, with slower growth domestically as well as on the Chinese mainland continuing to weigh on demand,” said John Zhu, economist at HSBC in Asia. “This means firms are still cutting jobs in the private sector and it poses a risk to consumption as a source of growth in 2015.”

Output has currently fallen in three of the past four months, with a number of companies citing deteriorating market conditions and relatively muted client demand. This was highlighted by a slower increase in new jobs in January, with the latest expansion only fractional.

Furthermore, new business from the mainland fell for the sixth straight month and at a slightly faster rate than in December.

On the costs front, average input prices and output charges both increased modestly in January, following reductions in December.

Hong Kong private sector employment continued to decline in January, with the rate of reduction the strongest in the more than five years since July 2009. Survey respondents generally linked the fall to the non-replacement of voluntary leavers. Despite lower staff numbers, companies were able to work through their unfinished workloads in January.

Hong Kong’s unemployment rate was unchanged at 3.3 percent in the three-month period ended December 2014 amid a stable labor market, data from the Census and Statistics Department show. The city’s unemployment rate has been steady at 3.3 percent since the May-July period. Hong Kong GDP growth forecast for 2014 is between 2.5 percent and 2.2 percent, while projecting 3 percent growth for 2015.

celia@chinadailyhk.com  
 
 
 
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