HSBC said that a key index of Chinese manufacturing fell further in February to hit its lowest level in 7 months in a sign of diminishing strength in the world’s second largest economy.

The British banking giant’s preliminary reading for its purchasing managers’ index for China, which tracks manufacturing activity in factories and workshops, fell to 48.3 this month. That marked a further tumble from the final reading of 49.5 in January, when the figure showed contraction for the first time in six months.

The index is a closely watched gauge of the health of the Asian economic powerhouse. A reading above 50 indicates growth, while anything below signals contraction.

Mr Qu Hongbin HSBC economist in Hong Kong, blamed February’s worsening figure on decreasing new orders and production at Chinese factories and called on the government to adjust policy to support growth.

He said that the building up of disinflationary pressures implies that the underlying momentum for manufacturing growth could be weakening.