Manufacturing in China remained stuck in a rut in June, with HSBC flash PMI data showing some improvement from May, but still indicating contraction for a fourth straight month.
The HSBC flash PMI for June rose to 49.6, above the 49.4 forecast in a Reuters poll, but still below the key 50 level which separates contraction and expansion. The official PMI came in at 50.2 last month.
The data were a mixed bag, Annabel Fiddes, economist at Markit, said in a statement with the data.
"On the one hand, the sector shows signs of improvement as output stabilized amid a slight pick up in total new work," Fiddes said. "On the other hand, manufacturers continued to cut their staff numbers, with the latest reduction the sharpest in over six years."
That suggests companies have muted growth expectations amid subdued demand both domestically and abroad, she said, adding that may spur authorities to step up stimulus efforts in the second half.
Fiddes isn't alone in her concern about the manufacturers' moves to lower their headcounts.
"Officials will be very worried about this," Frederic Neumann, a managing director at HSBC, told CNBC. "They've always said they draw the line at the labor market. They don't really care where headline GDP (gross domestic product) growth is as long as the labor market holds up and this particular reading suggests the labor market is still weakening and that would point to much more stimulus."
This reading isn't the only one which has spurred expectations that authorities will get out their policy toolkit again, with a slew of recent data, including imports and inflation, missing analysts' expectations. In the first quarter, China's economic growth slowed to 7.0 percent, its slowest in six years.