HSBC China Flash PMI fell to an eight-month low of 48.1 in March.
Economists polled by Bloomberg were looking for a reading of 48.7, up modestly from 48.5 in February. A reading below 50 indicates contraction.
The manufacturing output sub-index fell to an eighteen month low of 47.3.
Most of the sub-indices deteriorated, but new export orders offered a silver lining, increasing in March.
“The HSBC Flash China Manufacturing PMI reading for March suggests that China’s growth momentum continued to slow down,” Hongbin Qu, HSBC China’s chief economist said in press release.
“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.”
So far experts had attributed the slowdown to the impact of the Lunar New Year holiday.
But after last month’s release, Societe Generale’s Wei Yao pointed out that a “0.8 point decline in January and February combined was still sharper than the average decline of 0.5 point during the same period historically.” And the decline was broad-based.
China has set a GDP target of 7.5% this year but premier Li Keqiang has said the policymakers will tolerate a slower pace of growth.