Hong Kong business activity slumps further in July amid virus spike

HONG KONG (Xinhua): A private survey showed Wednesday (Aug 5) that the business activity contracted further in Hong Kong as the worsening Covid-19 epidemic weighed on business confidence.

The Purchasing Managers' Index (PMI) for Hong Kong compiled by consulting firm IHS Markit dropped to 44.5 last month from 49.6 in June.

A PMI greater than 50 indicates expanding business activity, while a figure lower than 50 indicates the contraction.

Having moved close to stabilisation in June, Hong Kong's business conditions worsened sharply at the start of the third quarter amid a tightening of containment measures due to a resurgence of new Covid-19 infections, IHS Markit said in a report.

The report showed that new orders declined at a steeper rate during July and firms, in turn, scaled back their purchasing activity substantially, resulting in a sharp fall in inventories. Business confidence deteriorated further, with rising concerns over the adverse impact of a new wave of Covid-19 cases on the economy.

Hong Kong's economy slumped 9 per cent year-on-year in the second quarter of this year, only improving slightly from a record-high 9.1-per cent drop in the first quarter.

Given a sluggish economy, the HKSAR government has rolled out unprecedented relief measures worth nearly HK$290 billion (US$37.4 billion) to help safeguard jobs, support enterprises and relieve people's financial burdens.

Hong Kong's Center for Health Protection reported 80 new confirmed cases of Covid-19 on Tuesday, taking the city's tally to 3,669.

The government has intensified social distancing measures, expanded testing capacity, added quarantine facilities, and sought assistance from the central government to contain the epidemic.