The HSBC purchasing managers' index (PMI) for China declined to 47.7 in July from 48.2 in June, declining for a third straight month to its lowest reading since August 2012.A reading below 50 indicates a contraction of activity while one above shows an expansion.
"With weak demand from both domestic and external markets, the cooling manufacturing sector has continued to weigh on employment," said Hongbin Qu, chief economist for China at HSBC. Mr. Qu added that the announcement of a series of government steps to boost spending in social housing, urban infrastructure, high-speed rail and energy-saving industries, while offering tax breaks for small firms, should boost confidence levels and reduce downside risks to growth in China.
In addition, the new orders sub-index in July declined to 46.6, also the lowest level since August 2012. Furthermore, new export orders in July contracted for a fourth successive month impacted by weakening external demand, especially from Europe and the US, according to the HSBC.
Meanwhile, according to the figures released by China's National Bureau of Statistics (NBS) on August 1, China's purchasing managers' index (PMI) for its domestic manufacturing sector rose to 50.3 percent in July this year, up 0.2 percentage points compared to June.