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Chinese manufacturing slows

Official Purchasing Managers Index declines.

China’s official Purchasing Managers Index (PMI), which measures manufacturing activities in the country, declined to 50.1 in June compared to 50.8 in May primarily due to weak demand in key markets.

A PMI of above 50 indicates an expansion in manufacturing/industrial activity, and below hints at contraction.

Zhang Liqun, an economist with Development Research Centre, said: “The June PMI fall, across the board on major sub-indexes, indicates downward pressure in the economy.”

A separate PMI, published by Markit and HSBC, revealed that the country’s manufacturing PMI declined  to a nine-month low of 48.2 in June from 49.2 in May, primarily due to fall in new export orders.

The survey also indicated that operating conditions for the manufacturing sector have worsened for the last two successive months.

Commenting on the Markit and HSBC PMI, Hongbin Qu, chief economist of china and co-head of Asian economic research at HSBC, said: “Falling orders and rising inventories added pressure to Chinese manufacturers in June. And the recent cash crunch in the interbank market is likely to slow expansion of off-balance sheet lending, further exacerbating funding conditions for SMEs. As Beijing refrains from using stimulus, the ongoing growth slowdown is likely to continue in the coming months.”