China manufacturing drops to 11-month low in July

HONG KONG - China's manufacturing operating conditions deteriorated at the quickest pace since last August, with HSBC's flash purchasing managers' index (PMI) dropping to 47. 7 in July, an HSBC report showed Wednesday.

HSBC said flash PMI this month fell to 47.7, down from a final 48.2 in June and the lowest in 11 months. Flash China Manufacturing Output Index also fell from 48.6 in June to 48.2 this month, hitting a nine-month low.

A PMI reading above 50 indicates growth, while a reading below 50 indicates contraction.

"The lower reading of the July HSBC Flash China Manufacturing PMI suggests a continuous slowdown in manufacturing sectors thanks to weaker new orders and faster destocking," said Hongbin Qu, chief economist at HSBC.

He said this adds more pressure on the labor market. As Beijing has recently stressed to secure the minimum level of growth required to ensure stable employment, the flash PMI reinforces the need to introduce additional fine-tuning measures to stabilize growth.

The HSBC Flash China Manufacturing PMI is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China.

The estimate is typically based on approximately 85 percent to 90 percent of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.