Activity in
China's factory sector seemingly contracted at the fastest pace in 15
months in July, a preliminary private survey showed on Friday in a blow
undercutting recent signs of stabilization in the struggling economy.
The
news came as Beijing announced it would allow its yuan currency to
fluctuate more widely within its trading band as a way to support the
trade sector.
Fears of faltering demand in the world's largest commodity buyer piled further pressure on resource prices, sending gold to a five-year low and copper to a six-year trough.
It also added to the woes of emerging market nations already struggling with the risk of a rise in U.S. interest rates later this year.
The flash Caixin/Markit China Purchasing Managers' Index (PMI) dropped to 48.2, the lowest reading since April last year and the fifth straight month under 50, the level which the survey-makers say separates contraction from expansion.
The drop confounded forecasts for a rise to 49.7, from June's final reading of 49.4, and slugged the Australian dollar to a six-year low AUD=D4.
China is Australia's biggest export market and investors use the currency as a liquid proxy for risk in the Asian giant.
The survey of executives in over 420 Chinese manufacturing firms found output, new orders and export orders all decreased.
"Today, it's big, bad news with this number well below consensus," said analyst Helen Lau of Argonaut Securities in Hong Kong. "It shows there's no signs of recovery in small and mid-sized business in China, but I think it's also related to the summer weak season for demand."
The China survey overshadowed better news from Japan where the flash Markit/Nikkei PMI rose to a seasonally adjusted 51.4 in July, from a final 50.1 in June, a welcome hint of economic acceleration after a surprise slowdown last quarter.
Notably, new orders in Japan pushed into positive territory which might help explain recent data showing firms are becoming more confident about increasing capital spending.
Yet the survey also found a slowdown in export orders, a trend that is bedevilling Asia and emerging markets generally.
Fears of faltering demand in the world's largest commodity buyer piled further pressure on resource prices, sending gold to a five-year low and copper to a six-year trough.
It also added to the woes of emerging market nations already struggling with the risk of a rise in U.S. interest rates later this year.
The flash Caixin/Markit China Purchasing Managers' Index (PMI) dropped to 48.2, the lowest reading since April last year and the fifth straight month under 50, the level which the survey-makers say separates contraction from expansion.
The drop confounded forecasts for a rise to 49.7, from June's final reading of 49.4, and slugged the Australian dollar to a six-year low AUD=D4.
China is Australia's biggest export market and investors use the currency as a liquid proxy for risk in the Asian giant.
The survey of executives in over 420 Chinese manufacturing firms found output, new orders and export orders all decreased.
"Today, it's big, bad news with this number well below consensus," said analyst Helen Lau of Argonaut Securities in Hong Kong. "It shows there's no signs of recovery in small and mid-sized business in China, but I think it's also related to the summer weak season for demand."
The China survey overshadowed better news from Japan where the flash Markit/Nikkei PMI rose to a seasonally adjusted 51.4 in July, from a final 50.1 in June, a welcome hint of economic acceleration after a surprise slowdown last quarter.
Notably, new orders in Japan pushed into positive territory which might help explain recent data showing firms are becoming more confident about increasing capital spending.
Yet the survey also found a slowdown in export orders, a trend that is bedevilling Asia and emerging markets generally.
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