Business conditions in Hong Kong’s private sector improved last month although the pace of growth was slower than in October as exports declined.  

According to a report released by S&P Global on Wednesday, the Purchasing Managers’ Index — a barometer of economic trends in the private sector — hit 51.2 in November for the special administrative region, down from 52.2 in the previous month.

The figure is based on a survey of some 400 purchasing managers in the SAR. A PMI reading above 50 signals expansion from the previous month, while below 50 indicates contraction. A neutral mark, or 50, reflects no change.

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“The latest figure signaled that economic growth has improved in the final quarter of the year despite a softening of output growth,” said Pan Jingyi, economics associate director at S&P Global Market Intelligence.

The report said business activity growth was sustained for a second straight month as new business inflows expanded. The wholesale and retail sector led the charge with the fastest growth in both activity and new business.

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The uptick in new sales contributed to the first increase in backlogged work in 14 months. The rise was marginal but, nevertheless, the most significant since June last year. As a result, Hong Kong companies hired more staff in November for the first time in seven months, mainly in the wholesale and retail sector.

The ongoing expansion in new business and the growing backlog indicate that “private sector output (of Hong Kong) may remain in growth in the near term”, said Pan.

There’s some relief on the cost side as input price inflation dropped to a near four-year low, enabling the city’s selling price inflation to ease, she said.

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However, new business from the Chinese mainland and abroad fell in November due to reduced client budgets and rising competition. Surveyed firms’ sentiment slipped to a 13-month low last month amid concern that the economic outlook, potential trade barriers, and intense competition could negatively affect future output.

Gary Ng, senior economist of Natixis Corporate and Investment Banking, said external risks, such as geopolitical factors, could lead to weaker exports next year, so the performance of Hong Kong’s private sector would depend on whether consumption or investment can provide a buffer against these challenges. 

Contact the writer at irisli@chinadailyhk.com