REUTERS
Activity in China's manufacturing sector shrank more sharply than expected in February, surveys showed on Tuesday, prompting smaller companies to shed workers at the fastest pace in seven years and suggesting Beijing will have to ramp up stimulus to avoid a deeper economic slowdown, according to Reuters.
The official Purchasing Managers' Index (PMI) fell to 49.0 in February from January's reading of 49.4 and below the 50-point mark that separates growth from contraction. Economists polled by Reuters had expected only a slight dip to 49.3.
"The PMI came in much weaker than markets expected, hinting that recent easing measures have had limited impact in turning around the weakening manufacturing sector," wrote senior emerging markets economist Zhou Hao at Commerzbank in Singapore, according to report.
The private Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI), which focuses more on small to medium- sized, private firms, showed activity contracted for a 12th straight month. It fell to 48.0, below market expectations of 48.3 and January's reading of 48.4.
Surveys showed conditions in China's job market were continuing to deteriorate, challenging policymakers who are finalising Beijing's next five-year development plan ahead of the annual parliament meeting starting on March 5.
The official PMI survey, which tends to focus on larger, state firms, has shown persistent declines in employment for the last 3-1/2 years, Reuters reported.
Both surveys on Tuesday showed further contractions in domestic and export orders, suggesting industrial output will remain sluggish in coming months.