China's manufacturing industry continues to contract as weak demand around the world leaves firms facing a drop off in export orders and growing stocks of finished goods. However, HSBC's latest Purchasing Managers' Index™ shows the rate of contraction has slowed, albeit marginally.

September's Flash PMI reading of 47.8 is slightly better than the 47.6 experienced last month - which was the sharpest contraction experienced by the industry in over three years.  However, the index remains well below 50 - the level which indicates the transition from contraction to expansion.  

The index is compiled using the views of senior purchasing executives in more than 420 companies across the country and is seen as a significant indicator to the health of China's manufacturing industry.

Qu Hongbin, HSBC's Chief Economist for Greater China, says: "Manufacturing activities remain lacklustre thanks to weak new business flows and a longer than expected destocking process."

He believes recent efforts by Beijing to lift growth, plus significant investment in infrastructure projects, will help the sector in coming months. He adds: "The recent easing measures should be working to lead a modest improvement from the fourth quarter onwards."

Follow this link to download the transcript.