OREANDA-NEWS.  July 12, 2012. China's PMI fell to 48.2 in June, the lowest since November 2011, as the slowdown in its economy continues. The HSBC PMI survey showed that output, new orders and employment are continuing to fall, with the seasonally-adjusted index down marginally from the 48.4 seen in May, reported the press-centre of HSBC. 

Qu Hongbin, HSBC chief economist, China, commented: "It's all about growth and employment. As external demand has weakened and domestic demand hasn't shown a meaningful improvement in response to earlier easing measures, growth is likely to be on track for further slowdown, hence weighing on the jobs market.

He added that he expects China to take more decisive action to stimulate growth in the coming months as inflation eases, saying: "Beijing has plenty of room and policy ammunition to avoid a hard landing."

Underlying the PMI figures is a lack of demand, both export and domestic, with total and foreign new orders falling at accelerated rates last month. New export orders dropped at the steepest rate in more than three years, with North America and Europe in particular ordering less. But the fall in overall new orders isn't fully reflected in manufacturing output, where the decline remained marginal, leading to the second largest increase in finished goods inventories since data were first compiled in April 2004.

While China's manufacturing workforce shrank again last month – the fourth month running – the rate of decline was the weakest in three months.

June also saw a sharp decline in average costs for producers, partly because of the fall in the price of oil and some other commodities. Companies reduced their factory gate charges last month and the pace of output price discounting was the steepest in 42 months, with some manufacturers reporting that competitive pressures also contributed to their price drops.

Overall the PMI's for much of Asia paint a picture of slowing activity, with the figures for Taiwan, South Korea and Vietnam all falling. However Indonesia's PMI rose, from 48.1 in May to 50.2 in June.