BEIJING: China’s manufacturing activity contracted in March at its fastest rate in almost a year, HSBC said on Tuesday, suggesting worsening conditions in the world’s second-largest economy and putting pressure on leaders to further ease monetary policy.
The British bank’s preliminary purchasing managers index (PMI) came in at 49.2, it said in a statement, below the breakeven point of 50 and the weakest reading since last April, when it hit 48.1.
It also slumped from a final reading of 50.7 in February and was far below the median estimate of 50.5 in a Bloomberg survey of economists.
The index, compiled by information services provider Markit, tracks activity in China’s factories and workshops and is regarded as a barometer of the health of the Asian economic giant.
The sluggish reading “signaled a slight deterioration in the health of China’s manufacturing sector in March,” said Markit economist Annabel Fiddes in the statement.
“A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers,” she said, adding that “relatively muted client demand” had led producers to cut prices.
Liang Hong, an economist with investment bank China International Capital Corp., noted the subindex for employment—a key consideration for macroeconomic officials—fell to its lowest level in six years.
“The pressure on the government to stabilize growth and support employment has increased,” Liang said in a report.
The March PMI is likely to add to fears that Chinese growth, a key driver of the global economy, may slow further.