(MENAFN- AFP) China's manufacturing growth slowed in August, indicating a recovery in the world's second-largest economy has yet to take hold, HSBC said Thursday.
The HSBC preliminary purchasing managers index (PMI), which tracks activity in China's factories and workshops, slipped to 50.3 this month, the British banking giant said in a statement.
The figure was down from a final reading of 51.7 in July and was the lowest for three months, it said.
The indicator is a closely watched gauge of the health of the Asian economic powerhouse and key driver of global growth.
A reading above 50 indicates the sector is expanding.
"Today's data suggest that the economic recovery is still continuing but its momentum has slowed again," HSBC economist Qu Hongbin said in the statement.
"Industrial demand and investment activity growth will likely stay on a relatively subdued path," he said, calling for "more policy support" to help consolidate the recovery.
Growth in both domestic and foreign new orders slowed from July while input and output prices contracted over the month, suggesting deflationary pressures, according to the statement.
"Both monetary and fiscal policy should remain accommodative until there is a more sustained rebound in economic activity," Qu said.
China's economic growth accelerated to a higher-than-expected 7.5 percent in the second quarter, up from 7.4 percent in the previous three months, which was the worst since a similar 7.4 percent expansion in July-September 2012.
But concerns remain over whether the rebound can be sustained in the face of an unruly slowdown in the housing market and risks in the banking sector.
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