Business activity in Hong Kong grew in September at its fastest pace since May as new orders increased, encouraging companies to hire more staff, the latest purchasing managers' index shows.
Production costs surged, due partly to oil prices, although solid business growth gave some companies greater pricing power, according to the index survey. The Brunswick Purchasing Managers' Index (PMI) rose to a seasonally adjusted 53.3 in September after dipping in August to 50.9. It was the ninth straight month that business activity expanded with the index reaching its highest level since May.
A reading above 50 indicates an expanding private-sector economy. It was last below 50 in December 2004, but only for one month.
"September was clearly a period of strong growth," Ray Bashford, a partner of Brunswick Hong Kong, said in a statement. "But most importantly, these figures show that the base for the general economic expansion, which has been underway for the past nine months, is strengthening."
Almost one in three respondents to the index survey said they saw an increase in business activity last month from the previous month, compared with just under 17 percent of respondents in the August survey.
However, rising oil prices helped push up purchase prices, which rose at their fastest pace in a year in September. Wage inflation hit its highest level in more than five years, reflecting some companies' difficulty in attracting and retaining staff, the survey showed. Private-sector employment rose for a ninth straight month.
Output prices hit their highest level since the survey began nearly six years ago although only about 16 percent of companies said they raised their charges last month, as solid business growth gave them pricing power.