China’s manufacturing activity slowed to a seven-month low in February, a private survey showed on Thursday, once again stirring concerns over the health of the world’s second-largest economy.
The flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to 48.3 from a final reading of 49.5 in January.
This is the second straight month the PMI has fallen below 50, which signals contraction.
“Economic activity has slowed in early 2014. Tighter credit in the fourth quarter of 2013 has made inventories more difficult to finance, prompting manufacturers to destock in February,” said Bill Adams, senior international economist with financial services firm PNC.
The reaction in markets was swift; the Australia dollar fell half a U.S. cent to $0.8957, from $0.9004 before the data, while Aussie stocks turned negative. Australia is particularly sensitive to data from China, its top export market.