Chinese manufacturing continues to contract

Date: Monday 02 Jul 2012

The HSBC Purchasing Managers' Index (PMI) for the Chinese manufacturing sector fell from 48.4 to 48.2 points in the month of June, the eighth consecutive monthly decline.

The second-quarter average was the lowest since the first quarter of 2009.

"As external demand has weakened and domestic demand hasn't shown a meaningful improvement in response to earlier easing measures, growth is likely to be on track for further slowdown, hence weighing on the jobs market," said HSBC chief economist for China Hongbin Qu.

"But as inflation eases sharply, Beijing has plenty of room and policy ammunition to avoid a hard landing. We expect more decisive easing efforts to come through in the coming months."

FM

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