The HSBC China Manufacturing PMI has fallen in July, mostly due to reductions in new business, representing the first month-on-month deterioration in Chinese manufacturing operating conditions since March 2009.
The seasonally-adjusted PMI posted below the neutral 50.0 threshold in July, falling to 49.5 from 50.4 in June.
This marked a distinct turnaround from the strong sector performance seen at the beginning of 2010, and continues the cooling trend observed since that peak, according to the PMI authors.
The manufacturing production fall in July decreased at a fractional rate that was slightly slower than in the preceding month. Those panellists that reported a decline in output often linked this to reduced intakes of new business, which fell for the second month in succession.
The rate of decline in new work accelerated to the quickest since March 2009, with many panellists citing lacklustre client demand as having negatively impacted upon new order books. New export business also fell in July, contrasting with near-record rates of growth seen throughout Q1 2010.
According to the latest data, outstanding business rose at a negligible rate in July, with a number of respondents reporting that they had sufficient capacity to deal with both new and existing business.
Staffing levels in the Chinese manufacturing sector rose again in July, extending the current period of growth to fourteen months. The rate of job creation was nevertheless only slight, and slower than in the preceding month.
Company expansion plans were cited by panellists as having supported employment growth in the latest survey period. Conversely, those firms that noted a drop in staff numbers widely commented that employees had left due to low salary payments.