Article by ForexTime
The HSBC manufacturing PMI number came in lower in March, indicating to markets that there was a slight deterioration in the health of the world’s second largest economy.
Activity in China’s manufacturing sector contracted in March according to the flash estimate which came in at 49.2. Economists had forecast a reading of 50.6, slightly weaker than February’s final PMI of 50.7. A figure above 50.0 indicates industry expansion, while below indicates contraction.
The HSBC manufacturing PMI is based on a survey of about 430 purchasing managers and it asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.
The disappointing PMI number is likely to push the Chinese government to implement more policy easing. Since November, there have been two interest rate cuts, a reduction in the amount of money Chinese banks must keep in reserve and repeated attempts by the central bank (PBOC) to reduce financing costs.
After the data, the Shanghai Composite Index fell 0.8 percent. Other Asian equity markets also suffered losses. Japan’s Nikkei stock average dipped about 0.1 percent, pulling away from the previous session’s 15-year highs.
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