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Wednesday, August 3, 2016, 19:09

Downturn of HK businesses slows in July

By Lin Wenjie

HONG KONG - Hong Kong's private sector downturn eased somewhat in July from the previous month, but was still below the 50 threshold that separates contraction from expansion, showing that operating conditions continued to worsen across the city's private sector.

The Nikkei Hong Kong PMI rose slightly to 47.2 in July from June’s low of 45.4, staying in the contraction territory for the 17th straight month, with a slower contraction in total new work supported by the softest fall in new orders from mainland China since March 2015.

"Although rates of contraction in output and new orders eased since the end of the second quarter, they remained marked overall," commented Annabel Fiddes, economist at survey compilers Markit.

While most of the sub-indexes picked up, the rate of job shedding, though moderate, was the fastest seen in three months, as some companies attempted to reduce their costs.

Looking forward, Fiddes believed that businesses in Hong Kong would still be struggling in the face of a weak global economic environment, unfavorable exchange rates and a subsequent fall in spending.

She further expected that the private sector would contract further in upcoming months, which is likely to translate into more bad news for the labor market, unless there is a meaningful improvement in demand.

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