1. Business conditions in the Hong Kong economy improved for the fourth consecutive month in September as domestic and global market conditions resulted in marked growth of business activity and new order volumes. After rising in each of the previous months, the seasonally adjusted PMI posted 54.8, its highest reading since June 2000.

2. The overall level of business activity in the Hong Kong economy expanded for the fourth month running in September, with the latest survey data signalling the most significant growth of output since June 2000. Companies generally attributed increased activity to stronger market demand conditions.

3. The manufacturing, services, construction and retails sectors all recorded improved levels of business activity in September, with the strongest growth seen in the manufacturing economy.

4. Hong Kong companies signalled that the volume of including new business had increased for the fourth consecutive month in September, in part reflecting the recent improvement of domestic and global economic conditions. Furthermore, the rate of expansion of new orders was the most significant for three-and-a-half years.

5. September data suggested that companies were raising their capacity levels in response to higher output and new order volumes. The overall size of the Hong Kong labour force has increased throughout Q3 2003 with the latest survey period seeing further modest growth of staffing levels. Meanwhile, input activity levels rose for the second successive month and at the fastest rate for three years. Companies reported that stocks had been replenished intentionally in order to meet the current (and expected future) needs of output.

6. Average input prices increased for the first time in six months in September, as both staff and raw material costs rose during the month. Higher purchasing goods prices reflected increased fuel costs and suppliers raising their prices in response to increased demand for certain raw materials, whilst average wages and salaries rose as a result of the recent strength of the labour market. However, the latest survey data suggested a squeeze on companies' profit margins as average charges declined again during September.

For further information  regarding the Hong Kong Purchasing Manager's Index contact: Paul Ng, Deputy Chaiman, The Chartered Institute of Purchasing & Supply Hong Kong, Tel: 852 9383 1863 e-mail: paulng@attglobal.net