UPDATE 1-Hong Kong's May PMI shows still stagnant activity
(Adds retail sales data, quotes)
By Susan Fenton
HONG KONG, June 2 (Reuters) - Business activity in Hong Kong's private sector stalled in May for a fourth straight month as new orders fell and companies grappled with accelerating costs, a purchasing managers' index showed on Monday.
Analysts said the data pointed to an impending economic slowdown although April retail sales data, also released on Monday, showed still robust growth in sales of 18.7 percent by value from a year earlier. That indicates that consumption will continue to drive economic growth although it too will slow.
"Overall, we see economic growth of 5 percent this year but that means growth in coming quarters will decelerate from 7.1 percent growth in the first quarter," said Irina Fan, senior economist at Hang Seng Bank.
The Hong Kong purchasing managers' index (PMI), based on a survey of 300 private companies, stood at 50.3 seasonally adjusted in May, little changed from 50.1 in April.
A reading of 50 is the dividing line between growth and contraction in the private sector and the index has been just above 50 since February.
Rising oil and metals prices pushed companies' costs in May to their highest level since the PMI survey was launched 10 years ago. Packaging and transport costs increased and there was still upward pressure on wages even though companies were hiring much less than last year.
To keep costs down, companies tried to use existing inventory instead of re-stocking, the survey showed. Continued...
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