Softer new orders and declining employment undercut the city of Hong Kong's business scene in March, reported S&P Global late last week.

The headline seasonally adjusted Hong Kong purchasing managers index PMI) posted at 48.3 in March, down from 49.0 in February, and slipping further below the 50-marker that separates expansion from contraction, reported S&P Global, citing its monthly survey.

"Business conditions across the Hong Kong Special Administrative Region private sector deteriorated at the end of the first quarter, and at a

sharper rate than that seen in February," advised S&P Global.

Key to the decline in March's Hong Kong PMI was a strong "reduction in new orders" for the month. Notably, "new business from abroad and mainland China fell at steeper rates than those recorded in February," said S&P Global.

Unlike for most nations or regions, for Hong Kong S&P Global does not provide separate PMIs for the manufacturing and services sectors, but only a single PMI for the city's entire private sector.

As a trade and tourism-focused city, Hong Kong is often considered a bellwether of the Asian Pacific business, financial and trade scene. In addition, Hong Kong has long been a regional shopping mecca.

Hong Kong enterprises in March felt pressure from rising input costs, but stable prices on charges to customers. "On the price front, the rate of input cost inflation gathered pace...to reach the highest since last October, said S&P Global. "However, competitive pressures meant that firms reduced their output charges and to the greatest extent in just over four years."

With new orders trailing off, and costs rising, Hong Kong employers in March trimmed payrolls. "Reduced capacity pressures also discouraged firms from taking on additional staff, with employment levels falling at the fastest pace in 20 months," reported S&P Global.

Pressed by weak demand and rising costs, business optimism in Hong Kong faded in March. "Notably, the degree of pessimism (in Hong Kong) was the greatest since November 2020, as firms highlighted concerns regarding the global economic outlook, trade barriers and intense competition," advised S&P Global.

The Hong Kong PMI was compiled by S&P Global from survey responses received from 400 private-sector companies from March 12 through March 26.