China's manufacturing sector performance continued to worsen with the factory activity entering an eighth month of contraction in June amid falling export orders, a key survey revealed Thursday.
Markit Economics said that the flash HSBC purchasing managers' index for the manufacturing sector fell to a seven-month low of 48.1 in June from 48.4 in May. A PMI below 50 indicates contraction in activity.
In June, Chinese manufacturers reported another decline in new export orders, the sharpest since March 2009. China's exports have been hit by sagging global demand for its goods, particularly due to the financial turmoil in Eurozone.
Overall new orders also shrank at an accelerated pace. The manufacturing output index fell to 49.1 in June from 49.7 in May, indicating a faster contraction in production. The reading is the lowest in three months.
China's manufacturing sector continued to slow in June, though the pace of slowdown seems to be slowing, HSBC Chief Economist Hongbin Qu said. "With external headwinds remaining strong, exports are likely to decelerate in the coming months," the economist added.
The survey also found that employment declined in June, but at a slower rate compared to the previous month. Decline in both input and output prices accelerated during the month, according to Markit.
"The sharp fall of prices and moderation of new orders suggest weak domestic demand, posing destocking pressures for Chinese manufacturers. All will likely weigh on the jobs market," Hongbin said.
While acknowledging that the economy is currently facing "increasing downward pressure," China's State Council last month said it will accelerate the process of fine-tuning of its policies to achieve more stable growth. It also vowed to give more priority to maintaining growth momentum and boost domestic demand.
The Chinese economy expanded 8.1 percent year-on-year in the first quarter of 2012, the weakest pace in nearly three years. Amid mounting concerns over slowing economic growth both at home and abroad, the People's Bank of China this month lowered its key interest rates, in the first such move since late 2008.
China has lowered the reserve requirement ratio in May and February to boost lending.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.