China June PMI hits 7-month low

Factory output and fixed asset investment could drag China's economy into its worse slowdown in 13 years this year

China's factory downturn worsened in June as a key activity index hit seven-month lows, data expected to fuel expectations the central bank may seek more policy easing to kick-start an economic recovery.

China's official purchasing managers' index (PMI) fell to 50.2 in June, above expectations but down from 50.4 in May, the National Bureau of Statistics said on Sunday.

It was the lowest reading since November, and economists expect things to worsen. They say cooling exports, factory output and fixed asset investment could drag the world's second-biggest economy into its worse slowdown in 13 years this year.

The sub-index for new export orders suffered its biggest monthly fall since December, shedding 2.9 percentage points to 47.5.

That is below the 50-point level that demarcates expansion from contraction, and shows Chinese factories received fewer new export orders in June compared to May.

New orders, which include domestic orders, were anaemic too, slipping 0.6 percentage points to 49.2.

The HSBC China Flash PMI, which gave an earlier glimpse of activity in China's vast factory sector, also retreated in June, reflecting an eighth straight month of contraction.

Sluggish economic performance in April and May galvanised China's central bank into cutting interest rates on June 7 for the first time since the depths of the great financial crisis in late 2008.