The HSBC China Manufacturing Purchasing Managers' Index released Sunday showed activity fell to 49.4 in July from 50.4 in June. A reading above 50 signals expansion, indicating manufacturing activity actually contracted for the first time since China's economic recovery began.
The HSBC PMI's reading was the first below 50 since March 2009. Measures of output, orders and export orders all showed contractions. Another measure, the official government PMI released yesterday (Monday), fell to 51.2 in July from 52.1 in June, the third straight month it has declined.
"We're in a moderate slowdown, not a double-dip," Ken Peng, a Beijing-based economist for Citigroup Inc. (NYSE: C) told Bloomberg News.
Similarly, HSBC Holdings plc (NYSE ADR: HBC) economist Qu Hongbin said China is having a "slowdown not a meltdown" and "there is no need to panic."