Chinese manufacturing could stumble for eight straight month

HSBC flash PMI estimate for June suggests a further contraction to 48.1% on the back of tumbling export orders.

Export orders faltered to 45.9% from 48.5% in May, which led the drag on the whole index to its eight consecutive month below the 50% expansion threshold.

A bottoming out is "likely" this quarter as the Chinese government rolls out supportive monetary and fiscal policies, said BBVA, but the rebound will only push the official PMI to "just above 50."

Here's more from BBVA:

The HSBC flash PMI estimate for June was released today, showing a further moderation, to 48.1% from 48.4% in May, remaining below the 50% expansion threshold for an eighth consecutive month. The export orders component of the PMI weakened significantly, to 45.9% from 48.5% in May. The outturn shows that underlying growth momentum in China remains weak, although we believe that it is likely to bottom out this quarter on supportive monetary and fiscal policies. The final HSBC estimate will be released on July 2, and has consistently been below the official PMI due to its smaller sample size and orientation toward export-oriented firms. We expect the official PMI for June, to be released on July 1, to remain just above 50.