September 3, 2012 / 2:37 AM / 6 years ago

China HSBC PMI drops to 47.6, worst since March 2009

BEIJING (Reuters) - A contraction in China’s factory sector activity intensified in August as both output and new orders dropped while manufacturers cut prices to compete for business, a survey showed on Monday.

Workers rest on steel pipes at a steel wholesale market in Shenyang, Liaoning province, August 1, 2012. REUTERS/Stringer

The HSBC Purchasing Managers’ Index fell to a seasonally adjusted 47.6, its lowest level since March 2009. The reading was little changed from a flash, or preliminary, estimate of 47.8 and was lower than 49.3 in July.

The HSBC finding echoed the results of China’s official PMI, released on Saturday, which hit a nine-month low in August, falling to a lower-than-expected 49.2 from 50.1 in July.

It was the first time the official PMI had fallen below 50 points, the threshold dividing expansion from contraction, since November 2011.

August marked the 10th straight month that the HSBC survey, which better reflects smaller and private-sector manufacturers, has been below 50.

The employment sub-index fell for the sixth month in a row, to its worst reading since March 2009.

Reporting By Lucy Hornby; Editing by Mark Bendeich

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