- Annabel Fiddes, economist at Markit
China's manufacturing activity continued to contract for the fourth consecutive month in June, a private survey from HSBC showed. The flash HSBC-Markit manufacturing PMI rose to 49.6 in the reported month, up from a final reading of 49.2 in May. A figure above the key 50-mark threshold signals expansion in the sector, whereas below that level indicates that business activity contracts. The flash reading is an early estimate based on around 85-90% of survey responses from over 420 small-to-medium-sized manufacturing firms.
Total factory output recorded no change in June after declining in May, while new orders rose, and new export orders dropped at a slower pace. Employment decreased further in June, and price pressures remained sluggish. The sector has been mostly in red territory for the past four years, according to the HSBC's PMI data, in line with economic growth data. China's economy has slowed from double-digit growth figures just a few years ago, to its weakest expansion in a quarter century this year. The slowdown largely has been triggered by underutilized capacity in the property market, which has been weighing on house prices and construction activity. Beijing have attempted to soften the growth deceleration by lowering interest rates, broadening lending, and reducing restrictions on home buyers.
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