S&P Global announced that the seasonally adjusted Purchasing Managers' Index (PMI) for Hong Kong in August dropped from 49.5 in July to 49.4, reflecting a fourth consecutive month of deteriorating business environment. However, the degree of tightening remains similar to the previous three months and overall is still considered not significant.

Jingyi Pan, Deputy Director of the S&P Global Market Intelligence Research Department, stated that the August PMI indicates that the business environment in Hong Kong is still relatively sluggish. However, the decline in new orders has narrowed for two consecutive months, and the tourism sector has become more active, which is bullish for export business, breaking the downward trend for ten consecutive months, reflecting initial signs of a turnaround. Since business sentiment, procurement, and employment levels remained low in August, overall growth in new orders becomes a key factor in economic recovery.

In addition, Pan pointed out that price trends are still pending observation. The inflation of input costs in August soared to the long-term average, which led to an expansion in output price increase. Since survey data shows that customer consumption has been under pressure, raising prices is likely to harm recent order demand.

During the period, new business from both mainland and overseas markets has grown, especially export orders, which recorded the first increase since November last year. Although the downward trend of new orders slowed with the growth of export business, private enterprises in Hong Kong maintained a pessimistic business sentiment. Operators expressed concerns about the impact of intensified competition and the unpredictable economic outlook.

The decline in new orders has also reduced the backlog of work for companies. Companies continue to digest their existing orders, resulting in a noticeable decrease in unfinished business, reaching a high level of nearly two and a half years. On the other hand, private enterprises in Hong Kong are not in a hurry to fill vacancies due to easing capacity pressure, resulting in a continuous decline in employment levels for the fourth consecutive month.

In terms of prices, overall input costs in Hong Kong continue to rise. Input cost inflation reached a six-month high, consistent with the long-term average. The performance of suppliers in August was generally similar to July, but the rise in raw material prices led to an increase in procurement prices. Coupled with wage growth, overall input costs have risen. As a result, companies choose to pass on the cost burden to customers, leading to the largest increase in output prices in five months, with manufacturers' price increases being the most significant.