As a signal that China’s slowdown has not reached its low, the nation’s manufacturing numbers continued to drop in July.
The reading of 47.7 for an index released today by HSBC Holdings Plc and Markit Economics was less than anticipated and could be the lowest in 11 months if confirmed in the final report August 1st. Readings below 50 indicate contraction.
Asian stocks and the Australian dollar fell as the extended weakness in production underscored Premier Li Keqiang’s challenge in meeting this year’s 7.0 percent economic growth target. The MSCI Asia Pacific Index (SHCOMP) of stocks dropped 0.1 percent at 11:11 a.m. in Tokyo, while China’s benchmark Shanghai Composite Index was down 0.4 percent.
The median estimate of 19 economists surveyed for the Flash Purchasing Managers’ Index, was for 48.2, the same level as in June. The Flash PMI from HSBC and Markit is based on about 85 percent to 90 percent of responses to surveys sent to more than 420 manufacturers.
The National Bureau of Statistics and China Federation of Logistics and Purchasing will release its own PMI on August 1st. The official PMI in June was 50.1, down from 50.8 in May.
“The key thing now is confidence,” Qu Hongbin, HSBC’s chief China economist in Hong Kong said. “The confidence now is pretty weak both in the financial market and the corporate sector.”