A key China economic indicator took a sharp turn for the worse, with the final reading for the Caixin China purchasing managers' index (PMI) for July surprising with a drop to a two-year low.
"The downturn in China's manufacturing sector intensified at the start of the third quarter. Renewed falls in both total new work and new export orders led manufacturers to cut production at the fastest rate since November 2011," the news release said.
The reading came in at 47.8, well below the 50-mark separating growth from contraction and also lower than the preliminary reading of 48.2, which also surprised markets on the downside. The data paint a darker picture than the official China PMI, released on Saturday, which avoided falling into contraction territory by coming in at 50 for July, down from June's 50.2 and below a Reuters poll forecast for 50.2.
Caixin's China PMI data tends to focus on smaller and medium-sized companies, filling a niche that isn't covered by the official data.