--HSBC preliminary June China PMI falls to 48.1 from May's 48.4
--Reading is eighth straight month showing contraction of
manufacturing activity
--Economists see need for more policy easing
BEIJING -- The preliminary HSBC China Manufacturing Purchasing
Managers Index, a gauge of nationwide manufacturing activity showed
that China's manufacturing activities contracted for an eighth
straight month in June, which could make the case for further policy
easing measures to boost growth.
The PMI fell to 48.1 in June compared with a final reading of 48.4 in
May, HSBC Holdings PLC said Thursday.
A reading below 50 indicates contraction from the previous month,
while anything above that indicates growth.
The sustained decline in the index highlighted the increasing
difficulties faced by the nation's manufacturers due to global
economic weakness.
"China's manufacturing sector continued to slow in June, though the
pace of slowdown seems to be slowing," HSBC Chief Economist for China
Qu Hongbin said in a statement.
The data also pointed to other trouble spots for the economy. Chinese
manufacturers reported the sharpest decline in new export orders since
March 2009, and there was weakness on the domestic front.
"The sharp fall of prices and moderation of new orders suggest weak
domestic demand, posing destocking pressures for Chinese
manufacturers. All will likely weigh on the jobs market," Mr. Qu
added.
Other economists came to a similar conclusion, and suggested that more
policy easing and economic stimulus are needed.
The weak data show that the Chinese government's policy easing is
still not enough to stimulate growth amid weak external and domestic
demand, Wei Yao, China economist at Societe Generale said.
"There should be a cut in interest rates and in the bank reserve ratio
in July," said Sheng Hongqing, senior economist at China Everbright
Bank. "The export situation is very difficult."
The preliminary China PMI figure, also called the HSBC Flash China
PMI, is based on 85% to 90% of total responses to HSBC's PMI survey
each month, and is issued about one week before the final PMI reading.
Liyan Qi and Grace Zhu contributed to the story
-Write to William Kazer at william.kazer@dowjones.com
(END) Dow Jones Newswires
June 20, 2012 22:55 ET (02:55 GMT)
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