Survey shows Chinese manufacturing weakened in February, employers cut staff

China’s manufacturing weakened in February and employers cut staff at the fastest rate in nearly five years, a survey showed Monday, adding to signs growth in the world’s second-largest economy is cooling.

HSBC’s factory purchasing managers index fell to 48.5 on a 100-point scale on which numbers below 50 show activity contracting. That was down from January’s 49.5.

China’s economic growth has slowed steadily as communist leaders try to reduce reliance on trade and investment and encourage growth based on domestic consumption.

“This calls for policy fine-tuning measures to stabilize market expectations and steady the pace of growth,” said HSBC economist Hongbin Qu in a statement.

Fewer new orders led manufacturers to cut staff for a fourth month in the fastest reduction since March 2009, the survey showed.

Chinese economic indicators can be distorted by the Lunar New Year holiday, which falls at different times during January and February each year.

This year’s holiday fell in February, as it did in 2013, making data from the two months easier to compare with last year.

“We think the slowdown is genuine,” said Julian Evans-Pritchard of Capital Economics in a report. “Tighter monetary conditions over the last few months are likely to have weighed on manufacturing activity.”

A separate PMI issued Saturday by a Chinese industry group, the China Federation of Logistics & Purchasing, fell to 50.2 for February, just above the cutoff for a contraction and its weakest pace in eight months. It was down from January’s 50.5.

The HSBC has a larger number of private companies in its sample, while the logistics federation has a bigger share of state companies.