HSBC: China manufacturing index hits 7-month low

A key index of Chinese manufacturing contracted further in February to hit its lowest level in seven months, HSBC said Thursday, in a sign of diminishing strength in the world's second-largest economy. The British banking giant's preliminary reading for its purchasing managers' index (PMI) for China, which tracks manufacturing activity in factories and workshops, fell to 48.3 this month. That marked a further tumble from the final reading of 49.5 in January, when the figure showed contraction for the first time in six months. The index is a closely-watched gauge of the health of the Asian economic powerhouse. A reading above 50 indicates growth, while anything below signals contraction. Qu Hongbin, HSBC economist in Hong Kong, blamed February's worsening contraction on decreasing new orders and production at Chinese factories, and called on the government to adjust its policy to support growth. "The building-up of disinflationary pressures implies that the underlying momentum for manufacturing growth could be weakening," he said in a statement accompanying the data. "We believe Beijing policy makers should and can fine-tune policy to keep growth at a steady pace in the coming year."