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China manufacturing weakens further in June: HSBC

China manufacturing weakens further in June: HSBC (by V. Phani Kumar)

HONG KONG (MarketWatch) -- Chinese manufacturing activity weakened further in June compared to business conditions in the previous month as output and new export orders declined, according to the initial findings of a survey by HSBC released Thursday. The so-called flash Purchasing Managers' Index dropped to a seven-month low of 48.1 in June, compared with the final reading of 48.4 in May, HSBC said in a statement. A reading below 50 indicates a deterioration in business conditions at factories, while one above 50 shows an improvement. The flash readings are based on 85% to 90% of the total responses to the survey questionnaire. Hongbin Qu, HSBC chief economist for China, said a sharp fall in prices and a moderation in new orders suggest weak domestic demand, which will likely weigh on the jobs market. HSBC expects "more decisive policy stimulus" from Beijing, he added. Mainland Chinese and Hong Kong stocks extended losses after the data, with the Shanghai Composite (CN:SHCOMP) down 1.1% and the Hang Seng Index (HK:HSI) 0.6% lower minutes after the release.