China's manufacturing activity slowed in June for the eighth consecutive month due to sluggish demand, according to a reading of the manufacturing purchasing manager's index (PMI) released by HSBC on Monday.

The PMI, which measures the factory output, edged down marginally to 48.2 in June from 48.4 in May, indicating the rate of contraction in China's manufacturing conditions has started to moderate.

A reading above 50 suggests expansion, while a reading below 50 indicates contraction.

HSBC said the continuous deterioration of new orders contributed to the weaker production growth. New orders declined to 47.2 in June from 47.9 in May, the lowest level of this year.

New export orders recorded a sharper month-on-month drop, falling by 2.8 pts to 45.7 in June, the lowest reading since March 2009.

As such, output growth weakened again to 49.3 in June from 49.7 in May, staying in the contractionary territory for the fourth consecutive month.

Inventories of finished goods rose for the second consecutive month, up to 51.7 in June from 50.9 in May, the second largest growth since the series began in April 2004, as new business contracted faster than production growth.

Qu Hongbin, chief economist at HSBC China said in the report that he expects Beijing to step up easing efforts to stimulate domestic demand and counterbalance the weak external demand.

"A shallower deterioration of total new orders compared with new exports orders suggested domestic demand showed some relative improvement," he said, "but a more meaningful improvement is needed to pull the economy into a modest recovery."