BEIJING – China's manufacturing activity contracted in March at its fastest rate in almost a year, HSBC said Thursday, with its purchasing managers index (PMI) suggesting worsening conditions in the world's second-largest economy.
The preliminary reading for the key Chinese indicator came in at 49.2, the British bank said in a statement, below the break even point of 50 and the weakest reading since last April, when it hit 48.1, according to the bank's data.
It also slumped from a final reading of 50.7 in February, the figures showed.
The index, compiled by information services provider Markit, tracks activity in China's factories and workshops and is regarded as a barometer of the health of the Asian economic giant.
The sluggish reading "signaled a slight deterioration in the health of China’s manufacturing sector in March," said Markit economist Annabel Fiddes in the statement.
"A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers," she said, adding that "relatively muted client demand" had led producers to cut prices.
The March PMI is likely to add to fears that Chinese expansion, a key driver of the global economy, may slow further.
The economy expanded 7.4% last year -- the slowest pace in nearly a quarter of a century -- and official data earlier this month showed production, consumption and investment growth had all fallen to multi-year lows.
The government has reduced its annual growth target for this year to "approximately 7%," the lowest since a similar goal in 2004.
Underlining official concerns over the economy, the central People's Bank of China cut benchmark deposit and lending interest rates in late February for the second time in three months.
Authorities have so far avoided big-ticket incentives to bolster growth as they seek to transform the economy from decades of double-digit annual growth to a slower but more sustainable one, a stage that they have branded as the "new normal."
But Premier Li Keqiang earlier this month signaled that more measures could be taken to prod expansion, saying that Beijing still has "a host of policy instruments at our disposal."
Copyright Agence France-Presse, 2015