Manufacturing activity in China contracted in June for the eighth consecutive month, announced HSBC, which believes that this will push the government to continue to take measures to support the economy.
The purchasing managers’ index (PMI ) fell to 48.2 last month, against 48.4 in May, according to a statement from the bank. An index reading above 50 indicates expansion, and an index below this means contraction.
The contraction in manufacturing activity continued last month despite a drop in interest rates occurred on June 8, the first in nearly three and a half years. The Chinese government seeks to stem a slowdown of growth due to weak exports.
The Gross Domestic Product (GDP) of China has increased by 8.1% yoy in the first quarter, against 9.2% last year and 10.4% in 2010.
The government will publish the growth figure for the second quarter on July 13.
“While external demand weakened and domestic demand has not improved significantly as a result of measures taken so far, growth will probably continue to slow,” said Qu Hongbin, co-director of department of economic research on Asia at HSBC, quoted in the statement by the bank.
HSBC expects growth of 7.8% in China for the second quarter, and a rebound in the second half of the year.
Sunday, an organization close to the government, the China Federation of Logistics and Purchasing (CFLP) announced on its side a slight expansion of manufacturing activity in June, but less than the previous month.
The PMI of CFLP rose to 50.2 in June, against 50.4 in May.