China’s Flash HSBC PMI Fell To 48.3 In Feb

The flash Markit/HSBC Purchasing Managers’ Index (PMI) fell dramatically to a lower-than-expected 48.3 this month from 49.5 in January.

That is much weaker than most forecasts, and is the lowest reading in seven months. A number below 50 signals contraction.

January was the first time the measure dropped below 50 since July 2013.

"The below 50 reading of the past two months leave little doubt of a downbeat manufacturing sector condition," writes Julian Evans-Pritchard, China economist at U.K. macro research firm Capital Economics, in a report. "The drop of the new orders component to 48.1 from 50.1 suggests a domestic weakness as the new export orders component actually rose."

"The weakness partly reflects the welcome slowdown in credit and investment growth," adds Evans-Pritchard. "That helps to contain China’s medium term credit risks, but it will continue to weigh on the manufacturing sector performance."