China's June Flash HSBC/Markit manufacturing sees further job losses

The Chinese Flash HSBC/Markit manufacturing PMI for June was slightly better than expected at 49.6. It remains in contraction territory however for the 4th consecutive month for six out of the past seven months, apart from the pop up to 50.7 in February 2015. 

One caveat is that the Flash HSBC PMI is based on a relatively small sample of around 420 companies compared to the official PMI which covers over 3,000 companies, notes Commerzbank. Nevertheless, the details point to a mixed picture with stabilization in output and an increase in new orders but new export orders decreased again. 

HSBC/Markit noted that the drop in employment was the sharpest in over six years, suggesting muted growth expectations as demand, both global and domestic, remains subdued, moreover, the drop in unemployment is likely to continue, says Commerzbank. Overall, the tone remains one of falling growth momentum in Q2 which is consistent with the weak industrial production numbers and slow project approvals, which indicates even more monetary stimulus in H2. 

"For USD-CNY, it continues to hold steady at around 6.2090. No sharp moves are expected particularly with the US-China Strategic and Economic Dialogue (S&ED) taking place in Washington from 22-24 June", stats Commmerzbank in a report on Tuesday.