China’s final HSBC manufacturing PMI climbed to 49.3 in July from 48.2 reading in June.However, this fell short of the 49.5 “Flash,” or preliminary, number, which economists consider to be a reliable forecast for the final number.
Any reading below 50 signals contraction in the industry.
Key points from Markit:
- Factory output up only marginally
- Employment down at sharpest rate in 40 months
- Fall in average costs continues
From HSBC economist Hongbin Qu:
Final manufacturing PMI confirmed only a modest improvement of manufacturing conditions thanks to the initial effect of the earlier easing measures. But this is far from inspiring, as China’s growth slowdown has not been reversed meaningfully and downside pressures persist with external markets continuing to deteriorate. We still expect Beijing to step up policy easing in the coming months to support growth and employment.
Earlier this evening, we learned that the official PMI number unexpectedly fell to 50.1 in July from 50.2 in June.
The HSBC number is weighted more heavily toward small and medium sized enterprises, which faces more challenges when things slow. This is why the official number tends to trend higher than the HSBC number.
China is the second largest economy in the world, and it is the most important growth drive for the global economy. However, it is slowing and economists remain split on whether the it will see a soft or hard landing.