The HSBC Holding’s flash manufacturing PMI, in conjunction with Markit Economics, ticked lower to 48.1 in March and signaled continued slowdown in the Chinese economy. The general consensus was 48.7, which was a bit higher than February’s 48.3 (which was revised up to 48.5). This marks the third consecutive month under 50, the level which indicates contraction.
Qu Hongbin, chief China economist at HSBC, said “weakness is broadly-based with domestic demand softening further.” The manufacturing PMI data is becoming an overall bellwether for the Chinese economy to global investors. Further slowdown will begin to put pressure on Premier Li Keqiang’s growth target of 7.5 percent. “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,” said Hongbin.
China has seen an abnormally long streak of poor economic data, including symptoms of housing sector stabilization from exponentially growing housing prices. According to the Bloomberg News survey of analysts, growth forecasts are already being pulled in to 7.4 percent from 7.6 percent. That would make the weakest annual pace since 1990.