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China Daily Website

China's factory activity weakens to 7-month low: HSBC

Updated: 2012-06-22 09:29
( Xinhua)

BEIJING - China's manufacturing activity in June slowed to the lowest level in seven months, continuing to trend below the boom-or-bust level, according to a reading of the manufacturing purchasing managers' index (PMI) released by HSBC on Thursday.

The flash China manufacturing PMI stood at 48.1 in June, compared with 48.4 in May, while the sub index of new export orders posted its sharpest decline since March 2009, according to the HSBC.

A reading above 50 suggests expansion, while a reading below 50 indicates contraction.

"China's manufacturing sector continued to slow in June, though the pace of decline seems to be easing," said Qu Hongbin, chief economist at HSBC China and co-head of Asian Economic Research at HSBC.

"With external headwinds remaining strong, exports are likely to decelerate in the coming months. The sharp fall of prices and moderation of new orders suggest weak domestic demand, posing destocking pressures for Chinese manufacturers," Qu said in the note.

Warning all these factors will weigh on China's job market, Qu expected more decisive policy stimulus to reverse the growth slowdown.

HSBC's preliminary figure for the Chinese PMI is calculated based on 85 to 90 percent of the total responses to HSBC's monthly PMI survey, and is issued about one week before the final PMI reading.

The National Bureau of Statistics and the China Federation of Logistics and Purchasing will release official PMI data for June on July 1. The official PMI data is based on a survey of purchasing managers in more than 820 companies in 20 industries.

The official PMI in May stood above the expansion territory but softened to a five-month low of 50.4 percent.

The calculation of the official PMI index covers more than 800 enterprises, including more State-owned and large enterprises, while HSBC's poll includes around 400 small- and medium-sized companies.