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Many small businesses in Hong Kong have pulled down the shutters as the economy shrinks and tourists stay away. [Photo/China Daily]

HONG KONG -- A private survey on Monday showed Hong Kong"s private sector was still in a severe downturn despite the latest benchmark index signaled slower deterioration of economic activities in December.

The headline Purchasing Manager"s Index (PMI) rose from 38.5 in November to 42.1 in December, the slowest deterioration in the health of the private sector since July, IHS Markit said in a report.

However, the London-based consulting firm said the rate of deterioration remained sharp as the average PMI reading for the fourth quarter stood at 40, the lowest since the survey started 21 and a half years ago.

As a main gauge of economic activities, a headline PMI greater than 50 indicates the expansion of the economy, while a figure lower than 50 indicates the contraction.

Bernard Aw, the principal economist at IHS Markit, said the December PMI data showed Hong Kong"s private sector economy finished off 2019 stuck in a severe downturn as businesses continued to struggle against the headwinds of social unrest.

The report said business activity and new sales still fell sharply and firms remained negative about the year-ahead business outlook. There were further deep cuts to input purchases and inventories, reflecting signs of pessimism. Employment was stagnant, while both input and output prices continued to fall.

Hong Kong braced for its first annual GDP decline since 2009 as social unrest has dragged on for more than half a year.

The economy suffering from the lackluster global trade started to worsen in an unprecedented pace in the third quarter as escalating violent incidents disrupted business activity, scared off visitors and caused severe damage to public and private property.

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