China’s once booming manufacturing sector is contracting at its fastest pace in nine months new business surveys show.
That is due to falling demand from debt-ridden Europe, which is China’s single biggest export market.
The export slump has put the Chinese economy under pressure, with the ripples now being felt across east Asia.
Analysts and investors believe the figures will mean for further measures from the Beijing government to support the economy.
China’s central bank on Thursday completed its largest weekly injection of funds into the financial system in seven months.
The HSBC Flash China manufacturing purchasing managers index (PMI) – a preliminary read-out that provides an early peek at data for August – fell to 47.8 this month, its lowest level since November and well down from July’s final figure of 49.3. The point that divides expansion from contraction is 50.
“Inventory numbers are the highest on record. Orders to inventory are the lowest since December 2008. Foreign orders to inventory are the lowest since January 2009. It’s very hard to put a positive spin on anything within the data,” said Robert Rennie, chief currency strategist at Westpac Bank In Sydney.
“Bottom line – a very poor update with some very poor China data to come.”