China's manufacturing activity contracted to a five-month low in February, according to private survey results released on Tuesday. The Caixin General China Manufacturing Purchasing Managers' Index (PMI), a reading by by financial information service provider Markit and sponsored by financial media group Caixin, edged down to 48 in February from January's 48.4.
A reading above 50 indicates expansion, while a reading below 50 represents contraction. The output category contracted again in February, by the steepest rate since September, as total new business fell for an eighth straight month, the survey found.
Meanwhile, stocks of finished goods shrank by the fastest pace since September 2011. Manufacturers continued to lower their prices as the cost of input materials fell further -- albeit by the slowest pace in 18 months -- under deflationary pressure. "The index reading for all key categories, including output, new orders and employment, signaled that conditions worsened, in line with signs that the economy's road to stability remains bumpy," said He Fan, chief economist at the Caixin Insight Group.
On Tuesday, the National Bureau of Statistics and the China Federation of Logistics and Purchasing released the official manufacturing PMI, which came in at 49 in February, down from 49.4 in January. The official PMI samples 3,000 relatively large enterprises in China. The Caixin PMI samples 420 small and medium-sized manufacturing enterprises and is relatively volatile due to its small sample size and the dominance of small enterprises.
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