China Factory Data Add To Economy Fears

China’s manufacturing sector has slowed further in June and a decline in new orders shows that the weakness is likely to drag on, according to a survey released on Thursday, the Financial Times reported. HSBC said its Chinese purchasing managers’ index was on track to fall to 48.1 in June from 48.4 in May, which would mark a seven-month low. In dipping further below the 50 threshold, the flash figure, which is the earliest piece of monthly economic data for China, indicates a steepening contraction of factory activity. The data added to concerns about the health of the Chinese economy, with the benchmark stock index in Shanghai down 1.5 per cent in morning trading. The government has already started to shift its policy stance to stimulate the economy, though it has moved only cautiously so far because officials believe that growth, while weak, is not collapsing. Virtually every component of the PMI survey, from manufacturing output to stocks of finished goods, pointed in a negative direction. But the declines were nowhere near as severe as late 2008 when the global financial crisis erupted. Qu Hongbin, HSBC chief economist for China, said: “With external headwinds remaining strong, exports are likely to decelerate in the coming months. The sharp fall of prices and moderation of new orders suggest weak domestic demand, posing destocking pressures for Chinese manufacturers. Read more. (Subscription required.)