The S&P Global Hong Kong SAR PMI rose to 49.0 in May 2025 from 48.3 in April, marking the softest contraction in private sector activity in three months. Both output and new orders declined only marginally, signaling an easing in business deterioration. Export demand remained weak but slowed in its decline, while sales to China stabilized after sharp drops in previous months. For the first time since January, employment levels rose—driven by hiring in the manufacturing and construction sectors - reflecting cautious optimism. Supply chains improved further, with vendor performance recording the sharpest delivery improvement since April 2023. Purchasing activity also moderated, and firms continued to draw down inventories. On prices, input costs rose at the slowest pace so far this year, leading firms to modestly raised output prices. Looking ahead, sentiment remained downbeat due to concerns over US trade policy uncertainty and weak domestic demand.