The private sector in Hong Kong grew at the quickest pace in over a decade last month as the city continues its recovery from its Covid economic slump.
In May the S&P Global Purchasing Managers' Index (PMI) increased to 54.9, a rise from 51.7 in April, and the steepest growth rate since March 2011, Bloomberg reports. A reading over 50 indicates expansion.
This is the most recent indication of an economic rally in Hong Kong, which contracted in Q1 for the first time in over a year, as the city implemented harsh restrictions to curb an Omicron outbreak. Surprisingly, retail sales rallied in April, along with exports.
The private sector data indicates Hong Kong's economy is “recovering strongly into the second quarter,” according to a statement by Jingyi Pan, economics associate director at S&P Global Market Intelligence.
Furthermore, new order growth sped up in May, fuelling the expansion of hiring and purchasing activity, she went on to add, saying overall sentiment is positive, “with the latest developments boding well for further improvements in business conditions.”
Certain challenges are still prevalent, however. Covid cases are beginning to edge higher once again, hitting a six-week high on Sunday. This has driven concerns the government may tighten the restrictions.
"As long as the city doesn't dial back the loosening to date, the recovery has sufficient momentum to keep going," said Bloomberg Economics' Eric Zhu in a note released on Monday. He added that footfall in shops and restaurants is at its highest since the end of January, and forecasts the rally to continue in future months.
Covid restrictions in Beijing have continued to impact Hong Kong’s economy, as trade with China was still affected in April, despite an improvement in overall activity.
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