The S&P Global Hong Kong SAR PMI declined to 49.3 in March 2026 from February’s 35-month high of 53.3, marking the first contraction in the private sector since last July, as new orders declined due to the impact of the Middle East conflict. New orders recorded the largest drop in nine months, reversing a five-month streak of strong expansion. Consequently, output and new business also dropped. Foreign sales also saw a similar decline, ending a four-month expansionary period. However, demand from China moved in the opposite direction, rising for the sixth consecutive month, although the rate of increase has slowed. Meanwhile, employment increased moderately. On prices, input cost inflation slowed to the softest pace since September last year, with purchasing prices falling to a seven-month low. Looking ahead, business sentiment rebounded slightly last month, supported by companies' expectations of increased customer demand.