China should apply more easing measures to support growth: HSBC

HSBC said on Tuesday that China should apply more easing measures to counter the downside risks to growth and inflation as the HSBC China Manufacturing Purchasing Managers Index (PMI) for March fell to 11-month low,

The flash reading of the headline PMI, which is an indicator of the economic health of the manufacturing sector, fell to 49.2 in March in China, the lowest since May 2014, according to the data released by HSBC.

Chief China Economist of HSBC Qu Hongbin said today's data point is the first in 2015 after the Chinese New Year period so it should be free of distortions related to the timing of the New Year.

Qu said the underlying demand has weakened further in China since late 2014 and is facing downward pressure. Moreover, this weakness is now also feeding through not just to prices but is reflected in deteriorating labor market conditions as well, he said.

Qu said new orders fell into contraction, while the output sub- index also moderated from the January-February average level, in line with the continuing contractions in recent economic activity data including floor space sold and power generation.

"We expect China's policymakers to deploy more easing measures to support growth," he said.