The HSBC China manufacturing purchasing managers’ index (PMI) fell to 50.3 according to the flash reading for August, down from a final reading of 51.7 in July. However, it remained above 50, indicating expansion, but indicated a loss of momentum even though the economic recovery is still continuing, HSBC says.

The cost of manufacturers’ purchases, including steel, began to decline after increasing slightly in July, while the quantity of purchases continued to increase but at a slow pace than previously.

“Industrial demand and investment activity growth will likely stay on relatively subdued paths,” says HSBC’s chief China analyst Qu Hongbin. “We think more policy support is needed to help consolidate the recovery,” he adds.

The flash PMI typically includes 85-90% of the respondents of the final PMI, which is released at the start of each month, Kallanish observes.