S&P Global announced that the seasonally adjusted Purchasing Managers' Index (PMI) for Hong Kong decreased slightly from 51.2 in November to 51.1 in December last year, reflecting a continuous improvement in the business environment for three consecutive months, although the magnitude of improvement was the mildest during this period, with growing output momentum further weakening. Overall, the data for December last year showed that sub-indices such as output, new orders, employment, and purchasing inventory were all lower than in November, leading to a month-on-month decline in the PMI value.

Jingyi Pan, Deputy Director of Economic Research at S&P Global Market Intelligence, stated that the data reflects the momentum of growth maintained at the end of last year. The average output index for the fourth quarter reached its highest point since the second quarter of 2023, indicating an improvement in economic growth compared to previous quarters, but the growth pace slowed in December, and the leading index also suggests that the trend of slowing down is likely to continue into the beginning of 2025. In addition, weakening external demand is suppressing growth momentum for the last month of 2024, and many businesses express concern about potential challenges to trade from U.S. tariffs, which will continue to influence business sentiment and economic conditions in the new year.

Pan continued to mention that businesses, in order to maintain sales channels, not only bear the rising costs but also start to lower selling prices, indicating that profit pressures faced by businesses are increasing. Looking at data from different industries, the Wholesale and Retail Trade was the most affected in December last year.

The report states that in December last year, businesses experienced a moderate decrease in new business from overseas and the mainland, leading to a slowdown in overall order growth to the lowest in three months. However, domestic customers' willingness to purchase strengthened, and the consumer base expanded, providing solid support for new orders, benefiting businesses that have been expanding operations for three consecutive months, although the growth was not significant.

In December last year, businesses continued to be bearish about their business prospects, but the pessimism waned on a month-to-month basis. Concerns from operators mainly stemmed from intensified competition and the impact of trade barriers on future sales performance. Since the sales outlook was not optimistic, businesses downsized their staff for the seventh time in the year. Although the reduction in positions was slight, it marked a difference from the situation in November where employees were added and was the largest decline in three months. The level of backlog work has increased for two consecutive months, reflecting that despite a slight uptick in capacity pressure, it has not changed the occurrence of reduced employment.

To cope with the growth of business activities, companies continued to actively procure in December last year, with the month-on-month increase remaining steady. Since there was a need to replenish inventory, businesses once again stocked up on inputs, and although the increase slowed month-on-month, supplier delays impacted the expansion speed of procurement inventory somewhat. In reality, the degree of regression in supplier performance reached the worst in two years, and survey data also revealed that demand for inputs surged, compounded by weather disturbances, causing suppliers to delay deliveries.

As for overall input costs, they continued to rise in December last year, but the increase has fallen close to a four-year low. Overall, employee costs stabilized after rising for 32 consecutive months, but the increase in procurement prices was the largest in 15 months, exceeding long-term averages; under rising raw material prices, procurement costs continue to weigh heavily, becoming the primary driver of overall input costs. Nevertheless, businesses did not pass the additional costs onto customers; instead, in order to maintain sales channels, they lowered selling prices for the first time in seven months.