China's manufacturers fell in July, the biggest drop for 15 months, with lower output and fewer new orders, according to a private survey on Friday.
The flash Caixin China Manufacturing Purchasing Managers' Index (PMI) retreated from 49.4 in June to 48.2 in July, the lowest since April in 2014. A reading above 50 indicates expansion, while a reading below that represents contraction.
The sub-index on manufacturing output is 47.3 in July, a 16-month low, and down from 49.7 in June. New orders and new export orders grew in June,but dropped in July. Employment continued to go down, but at a slower pace than in June.
The manufacturing output index and the new order index hit record lows in more than one year, indicating the foundation for economic recovery is not stable and the manufacturing sector is still in difficulties, said Qu Hongbin, chief China economist with the Hongkong and Shanghai Banking Corporation (HSBC).
The data may bring pressure for China to continue with its loose monetary policies, Qu said.
China's economy posted 7-percent growth year on year in the second quarter, unchanged from the first quarter, but better than market predictions.
This is the first time the index has been released since it was renamed, after Caixin Media Co., Ltd. replaced HSBC as sponsor of Markit's China PMI. HSBC held the sponsorship for five years, and CLSA sponsored the Markit China PMI prior to HSBC.
The flash index is published on a monthly basis ahead of final PMI data, making it the earliest available indicator of manufacturing sector operating conditions in China. The estimate is based on approximately 85 to 90 percent of total PMI survey responses each month and is designed to provide an indication of the final PMI.
The final PMI for July will be released on Aug. 3.
