In May this year, the China HSBC Flash Manufacturing Purchasing Managers Index (PMI) decreased to a seven-month low, falling to 49.6, as compared to the final value of 50.4 in April, as announced by the HSBC.
A reading below 50 indicates contraction, while a figure above 50 indicates an expansion. The China flash PMI in May slipped below the 50-point level demarcating expansion from contraction for the first since October last year.
A sub-index measuring overall new orders in Chinese manufacturing dropped to 49.5, the lowest reading since September 2012, suggesting China's domestic economy is not strong enough to offset soft external demand. The flash Chinese manufacturing output index for May decreased to a three-month low of 51.0 percent, the HSBC said.
"The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds," HSBC economist Qu Hongbin said in a statement.
"A sequential slowdown is likely in the middle of the second quarter, casting downside risks to China's fragile growth recovery. The further signs of labor market slackness call for more policy support. The Chinese government still has the fiscal ammunition to do so," Mr. Qu added.