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Hong Kong's Private Sector Activity Grows at Fastest Pace Since February

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Hong Kong's Private Sector Activity Grows at Fastest Pace Since February

Hong Kong's private sector activity continued to expand in June, supported by stronger output and new orders, according to data released by S&P Global on Monday.

The headline S&P Global Hong Kong SAR Purchasing Managers' Index (PMI) rose to 52.0 in June from 50.4 in May, signaling a stronger improvement in overall business conditions.

Business activity and new orders both expanded at the fastest pace in four months, supported by new product launches, stronger client demand and increased spending during the World Cup.

Demand also strengthened beyond the domestic market, with new orders from both mainland China and overseas increasing modestly. The latest survey marked the first increase in new business from mainland China in three months.

Employment, however, declined for a third consecutive month, although the pace of job shedding remained marginal.

Purchasing activity also fell for the first time since last September, as firms cited concerns about the sales outlook.

Input cost inflation eased to a three-month low but remained elevated, driven by higher raw material prices and rising labor costs.

Companies continued to pass on part of the higher costs to customers, although selling price inflation slowed to its weakest pace in three months.

"Business activity and new orders both expanded at the fastest rates in four months, contributing to the strongest improvement in conditions since February," Usamah Bhatti, economist at S&P Global Market Intelligence, said.

"Private sector companies reported lower employment for the third month in a row, while concerns around the demand outlook led firms to reduce input buying for the first time since last September," he added.

Firms continued to cite subdued domestic demand, while some expected easing geopolitical tensions in the Middle East to support economic growth.

The survey comes as official data showed Hong Kong's inflation picked up in May, with the composite consumer price index rising 2% year over year from 1.7% in April, suggesting underlying price pressures remained firm heading into June.

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