Slow growth in Hong Kong business activity in June

Business activity in Hong Kong grew at its slowest rate in three months in June, the Brunswick Hong Kong Purchasing Managers' Index showed on Monday. The seasonally adjusted purchasing managers' index (PMI) stood at 52.8 in June, in line with the mean of the previous 12 months but down from a 13-month high of 54.4 in May. A reading over 50 indicates economic expansion.
Growth in output and new business slipped to three-month lows, partly because of a more muted performance by Hong Kong exporters, the survey showed. Though Hong Kong businesses reported new orders from mainland China continued to rise, the rate of growth slowed.
"The Brunswick PMI underlines how strong the (economic) recovery has been for the past six months," the sponsor of the survey, public relations firm Brunswick, said in a statement. "Although there was a slight easing during June, the underlying trend indicates the economy is set for growth.
Hong Kong's May exports rose a robust 16.9 percent from a year earlier, more than double forecasts for a 6.8 percent increase, indicating the city is still riding on the back of China's strong exports.
The government has forecast 4.5-5.5 percent economic growth this year, down sharply from 8.1 percent last year, as global trade growth slows.
New orders in the private sector grew in June, fuelled by a better domestic business climate and sales promotions, but growth slowed from May's nine-month high, the survey showed.
Backlogs of work continued to grow at a solid rate in June, suggesting that output would rise in coming months.
Staffing levels continued to rise, with almost 10 percent of firms reporting they had hired more staff in June in response to rising workloads and to prepare for future expansion. However, input costs rose for the 22nd month in a row, on the back of rising wages, purchases prices and skill shortages.
In an effort to protect their margins from sharply rising costs, Hong Kong firms again raised their output prices in June, with the rate of increase hitting a seven-month high. Nevertheless, inflation of average output prices remained well below that of costs.