Hong Kong's private sector economy continues to expand, although the overall growth rate was only marginal, according to HSBC's latest survey on purchasing managers.

The HSBC PMI, a composite index designed to measure changes in prevailing business conditions in Hong Kong's private sector economy, rose to five-month high of 50.5 in August from 50.3 in July, which stood in sharp contrast to China's manufacturing PMI which fell to its lowest since March 2009.

A PMI reading above 50 indicates expansion of the sector and Hong Kong's August headline PMI stays above 50-mark for second month running.

"Hong Kong is still putting up a good fight against slumping European demand and a sluggish mainland turnaround," Donna Kwok, Greater China economist at HSBC, said in a research report.

She told China Daily that Hong Kong's PMI in August was supported by the city's domestic demand and solid consumer confidence, underpinned by continued wage growth and relatively strong job market.

Despite Hong Kong's employment index contracting in August for the fourth straight month, printing 48.2 (July: 48.8), encouragingly, as before, the bulk of respondents are still attributing the decline in headcount to voluntary resignations, not staffing reductions, said Kwok.

"And the wages in Hong Kong continued to rise," she said, adding that it bodes well for household confidence, helping to set a higher floor beneath consumer spending.

Meanwhile, the inflation pressures are still contained, as August's input and output price indices rose marginally, printing 50.9 (July: 48.8) and 49.9 (July: 48.3) respectively, according to the survey.

Kwok also stressed that new product launches helped to stabilize business inflows from China for the first time in five months, which is another encouraging signal to support HSBC's view that Hong Kong should escape recession in 2012.

"Although the overall performance of Hong Kong's private sector in August is better than the private sectors on the mainland and in Korea...it is still too early to say that rising of Hong Kong PMI is sustainable," she warns

Kwok pointed out that currently, the unemployment rate in Hong Kong is very low and there is barely any room for the rate to go lower, meanwhile there is still growing headwinds from Europe and the protracted turnaround playing out in China.

Besides, the impact of rising global energy prices are expected to show in the coming months, the businesses' ability and willingness to shoulder the whole burden of higher input costs are expected to be increasingly challenged, she said.

sophiehe@chinadailyhk.com

(HK Edition 09/06/2012 page2)