Chinese manufacturing weakened again this month, extending a decline that began last summer, the flash Purchasing Managers' Index (PMI) of HSBC Holdings PLC (LON:HSBA) revealed Monday.
The widely followed metric dropped to an eight-month low of 48.1 in March, compared with a final reading of 48.5 in February. The reading remains below the 50-mark that divides contraction from expansion in the sector.
Economists polled by Bloomberg were expecting a reading of 48.7, up from 48.5 in February. Markets are sensitive to the release as worry increases regarding the financial health of the world's second-biggest economy.
The manufacturing output sub-index dropped to an 18-month low of 47.3. Most of the sub-indexes showed deterioration, but new export orders provided a silver lining.
"The HSBC Flash China Manufacturing PMI reading for March suggests that China’s growth momentum continued to slow down," said Hongbin Qu, HSBC China's chief economist. "Weakness is broadly-based with domestic demand softening further. We expect Beijing to launch a series of policy measures to stabilize growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower."
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The flash index is published ahead of final PMI data and is often based on 85 percent to 90 percent of total survey responses each month.