HK Aug business activity rises for first time in 14 months

* HK business activity up in August for first time in 14 mths

* Orders up for a second month, at fastest pace since Dec '07

* Companies continue to shed staff but pace of lay-offs eases

HONG KONG, Sept 1 - Data from the HSBC Hong Kong Purchasing Managers' Index for August:

KEY DATA

Aug Jul Jun May Apr Mar Feb Jan Dec HK PMI 52.8 49.9 47.1 44.8 44.3 42.7 40.6 40.3 39.6

CONTEXT

* PMI adds to recent economic data showing Hong Kong pulled out of recession in the second quarter. Business activity rose in August for the first time since June 2008, with the PMI rising to 52.8, its highest level since December 2007.

* New orders rose for a second straight month and at the fastest pace since December 2007 but orders from mainland China rose at a slower pace than in July.

* Purchasing activity increased for the first time since September 2008 but companies continued to cut staff although there were far fewer job cuts than in preceding months.

* Companies' costs rose for a second month but firms had to reduce their output prices for an eleventh month.

* The PMI accurately indicated Hong Kong's descent into recession in the third quarter of 2008. A PMI reading above 50 indicates growth in activity, below 50 signals contraction.

* The PMI survey compares business conditions with those a month earlier, based on data from 300 private Hong Kong companies in manufacturing, services, retail and construction.

The data is collected by UK-based Markit Group Ltd, and the report is now sponsored by HSBC. For more details, click http://www.markit.com/information/register/reuters-pmi-subscriptions

(For more stories on the Hong Kong economy, click on [HK-MCE-RTRS-LEN) (To read more PMI reports from around the world, click on [PMI-MCE-RTRS-LEN])