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Hong Kong private sector expands for third straight month, driven by exports to mainland

Hong Kong private sector expands for third straight month, driven by exports to mainland

HONG KONG: Hong Kong’s private sector showed growth for the third straight month, driven by stronger export sales to the mainland, though business confidence remained negative. The latest Nikkei Hong Kong Purchasing Managers’ Index, a gauge of the sector’s health, showed that Hong Kong’s business conditions improved in the second quarter. In June, the PMI stood at 51.1, up from 50.5 in May. This was the first quarterly expansion in three years.

A score above the 50-point threshold indicates growth, while one below means contraction. Demand from mainland China rose at the quickest pace in nearly three-and-a-half years, helping to drive growth. Increased employment and inventories also helped boost production. The city’s private sector hired more workers for the second straight month. Business sentiment remained weak, however, with firms being cautious as to whether this growth would be sustained in the near future. “Companies [are] blaming a still weak economic environment, a strong currency, high competition and rising costs for the pessimism,” said Bernard Aw, an economist at Markit, the financial information service provider that compiled the index. “That suggests the current upturn may not gain stronger momentum in the coming months.”