China's manufacturing activity fell to its lowest level in more than three years in August as the global economic slowdown continues to weigh on the world's largest exporter.
The final reading of the official Purchasing Managers' Index (PMI), which gauges nationwide manufacturing activity, fell to 47.6 last month from 49.3 in July, according to data released over the weekend.
This was the lowest since March 2009 and marked the tenth consecutive monthly fall, the bank said. It chimed with the official PMI figure released Saturday, which hit a nine-month low of 49.2.
A PMI reading above 50 indicates expansion, while one below 50 points to contraction.
Qu Hongbin, an economist for HSBC, Europe's largest bank, said the figures showed China's manufacturing sector faced "intensifying downward pressure" and urged the government to step up easing measures.
"China's exporters are facing increasing difficulties amid stronger global headwinds," he said, adding new export orders contracted last month at the sharpest pace since March 2009 while employers cut jobs at the fastest rate in 41 months.
Authorities have tried to boost the economy with interest rate cuts and by lowering the amount of reserves that banks must keep on hand in a bid to spur the kind of lending that could stimulate a rebound.
However, Qu said the latest manufacturing figures indicated the previous stimulus efforts were not sufficient and more was needed.
"Beijing must step up policy easing to stabilise growth and foster job market conditions," he said.
China's economic expansion slowed to 7.6 per cent in the second quarter to the end of June, the worst performance in three years and the sixth straight quarter of slower growth.
July figures for trade, industrial output, retail sales and foreign direct investment were also weak, raising concerns that government efforts to stimulate growth may have been insufficient.
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|William A. Cook|