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01 Jul 2013

PMI: China slowdown

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Chinese manufacturing slowed in June as export orders continued to weaken, according to the HSBC China Purchasing Managers’ Index™. The headline figure dropped to 48.2, down from 49.2 in May. The HSBC Flash China PMI™ for June was 48.3.

Operating conditions deteriorated at the quickest pace since last September. Total new orders declined for the second month in a row. New export orders fell, with the rate of contraction the joint fastest since March 2009. A number of companies suggested that the drop in new export orders was because of lower demand from Europe and the US.

As Beijing refrains from using stimulus, the ongoing growth slowdown is likely to continue in the coming months

Qu Hongbin, Chief Economist for Greater China, HSBC

Qu Hongbin, Chief Economist for Greater China and Co-Head of Asian Economic Research, HSBC, said: “Falling orders and rising inventories added pressure to Chinese manufacturers in June.” He added: “As Beijing refrains from using stimulus, the ongoing growth slowdown is likely to continue in the coming months.”

Staff numbers fell for the third month in a row and the rate of job losses was the fastest since August 2012. Manufacturing output fell for the first time in eight months, though the rate of contraction was modest. Inflationary pressures continued to ease with the cost of raw materials falling for the fourth successive month, and a number of companies passing on these savings to customers.

The HSBC PMI™ is based on data from purchasing executives in more than 420 manufacturing companies. A reading above 50 suggests expansion, while below 50 suggests decline.

China services inch ahead

There was a modest increase in China services sector activity during June, in contrast to the drop in manufacturing. The HSBC China Services Business Activity Index was 51.3, compared to 51.2 in May.

New services orders increased, but at the weakest pace in 55 months. Employment levels rose modestly largely because of new projects. Services firms remained optimistic that activity would be greater in 12 months, but their optimism was at the weakest level since data collection began in 2005, with concerns about relatively weak demand.

The China Services PMI™ is based on a monthly survey of firms in transport and communication, business and personal services, computing and IT, hotels and restaurants, and financial intermediation. An Index figure above 50 signals an improvement, below 50 a deterioration.

The intellectual property rights to the HSBC China Manufacturing PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under license. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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