China's factory activity fell to a three-month low in August, a private survey showed on Thursday, signaling continued weakness in the sector despite the recent burst of stimulus from the government.
The HSBC flash Purchasing Managers' Index (PMI) came in at 50.3, much lower than a Reuters poll expecting 51.5 and following an 18-month high of 51.7 in July.
It's the lowest reading since May, although it remained above the 50-mark which separates expansion from contraction.
The Australian dollar slumped following the data, falling to $0.9246 from $0.9280. China's Shanghai Composite Index fell 0.4 percent while Hong Kong's Hang Seng Index lost 0.4 percent.
"Sharp falls in the output and new orders components, which both dropped to 51.3, from 52.8 and 53.3, respectively, were largely responsible for the lower headline index. The export orders sub-index also fell, but by a smaller margin, suggesting that the weakness is mostly domestic," said Julian Evans-Pritchard, China economist with Capital Economics.
"The drop in the PMI is perhaps not surprising given last month's disappointing activity and lending data. After rushing to shore up growth in Q2, it seems that policymakers are now taking a more hands off approach, with support from infrastructure spending beginning to level off," he added.