China's manufacturing activity shrinks in June – HSBC

21 June 2012 10:47  [Source: ICIS news]

SINGAPORE (ICIS)--China’s manufacturing activity – as measured by the HSBC flash purchasing managers’ index (PMI) – has contracted for an eight straight month in June as export orders sentiment weakened, UK-based banking firm HSBC said on Thursday.

The preliminary PMI fell to a seven-month low of 48.1 in June from a final reading of 48.4 in May, HSBC said in a statement. This follows April’s final reading of 49.3.

A figure above 50 indicates an expansion, while a figure below 50 represents a contraction.

Both the new orders and new export sub-indexes contracted at a faster rate in June, HSBC said.

China’s manufacturing sector continued to slow in June, though the pace of slowdown seems to be slowing,” its chief China economist, Hongbin Qu, said.

Exports are likely to decelerate in the coming months on the back of stronger external “headwinds”, according to Qu.

The sharp fall of prices and moderation of new orders suggest weak domestic demand, posing destocking pressures for Chinese manufacturers, Qu said.

“All will likely weigh on the jobs market. As such, we expect more decisive policy stimulus to reverse the growth slowdown,” Qu added.

By: Nurluqman Suratman

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