Kenneth Rapoza, Forbes.com

No one doubts an economic slowdown in China, but when data shows economic sentiment is worsening to levels not seen in 39 months, it makes one wonder if a harder-than-soft landing is occurring in the world’s No. 2 economy.

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On Thursday morning, the latest HSBC Flash PMI for China fell to 48.1 in June from 48.4 in May.  The Purchase Managers Index is always bearish when below 50.

HSBC’s PMI reading is the lowest reading in China’s current economic downswing and the lowest since March 2009.  It’s been consistently below 50 for 8 months in a row. One cautionary note, however, is that while the HSBC PMI is meant to be seasonally adjusted, it has only risen in June from May in two of the last eight years (on average it has fallen by 0.8 points), suggesting there may have been some downward seasonal bias in the way HSBC runs the numbers.

Nevertheless, Thursday’s drop in the China’s unofficial PMI goes against the grain of a host of other economic indicators, hinting that the economy is bottoming, including new loans, newly planned investment projects, real estate investment, exports, and weaker car sales.

Nomura Securities analyst Zhiwei Zhang said that the HSBC PMI reading will likely translate into an official PMI reading from the National Bureau of Statistics of 50.1 for June, compared with Nomura’s forecast of 49.2. This would still be down from the 50.4 NBS PMI reading in May.

Zhang said the weaker data does not change his view on the Chinese economy.

“China’s economy is in the process of bottoming out. So there’s been no change to our forecast that GDP growth will slow from 8.1 percent in the first quarter to 7.8 percent this quarter, before picking up to 8.6 percent in the third and 8.9 percent in the fourth,” Zhang said in a note to clients Thursday morning from Hong Kong.