The final Markit/HSBC manufacturing Purchasing Managers' Index (PMI)
fell to a seven-month low of 48.5 in February, the third straight
monthly decline, from January's 49.5. The figure was in line with
the 48.3 reported in the preliminary version of the PMI released on
A reading below 50 indicates a contraction, while one above 50 shows
"Signs are becoming clear the risks to GDP growth are tilting to the
downside," said Hongbin Qu, chief economist for China at HSBC, in a
statement accompanying the PMI results.
"This calls for policy fine-tuning measures to stabilize market
expectations and steady the pace of growth in the coming quarters."
The PMI, which measures sentiment, found that new orders and output
both contracted for the first time in seven months, while new export
orders contracted less than in January.
Output was likely affected by manufacturers closing for China's
biggest annual holiday, the Lunar New Year festival, which began on
January 31 and covered early February, although the PMI results are
The employment sub-index also fell for a fourth straight month to
47.2, its lowest point since March 2009.
That sub-index is one of the few indicators to measure the health of
China's labor market, a priority area for Beijing, which wants to
keep unemployment low in order to maintain social stability.
The official government PMI, released on Saturday by the National
Bureau of Statistics (NBS), showed that activity in China's factory
sector slowed to an eight-month low in February.
The official survey is weighted more towards bigger and state-owned
enterprises and tends to paint a rosier picture than the HSBC/Markit
survey, which focuses more on smaller firms and those in the private
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China's economic indicators have been mixed of late. Weak investment
and declining PMI readings have been countered by surprisingly
buoyant exports and bank lending.
The government has been trying to reduce the economy's dependence on
exports and enhance the role of domestic consumption, but it is
unclear how much growth it might be willing to sacrifice to reach
Some analysts have said weak PMI numbers would encourage the
government to loosen monetary policy in order to keep the economy
growing at 7.5 percent, a level that government economists have said
could again be the official target, as it was in 2013.
Last year China's economy grew 7.7 percent, steady from the previous
year and fractionally above market expectations of 7.6 percent,
which would have been the slowest since 1999.
(Reporting by Adam Rose; editing by Eric Meijer)
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