China's weak factory activity data raises pressure for consumer stimulus

China's manufacturing activity sank to a six-month low in August as factory gate prices tumbled and owners struggled for orders, an official survey showed on Saturday, pressuring policymakers to press on with plans to direct more stimulus to households.

The National Bureau of Statistics purchasing managers' index slipped to 49.1 from 49.4 in July, its sixth straight decline and fourth month below the 50 mark separating growth from contraction. It missed the median forecast of 49.5 in a Reuters poll.

After a dismal second quarter, the world's second-largest economy lost momentum further in July, prompting policymakers to signal they were ready to deviate from their playbook of pouring funds into infrastructure projects, instead targeting fresh stimulus at households.

Sentiment remains gloomy among manufacturers as a years-long property crisis keeps domestic demand in the doldrums and Western curbs loom on Chinese exports such as electric vehicles.

Producers reported factory gate prices were their worst in 14 months, plunging to 42 from 46.3 in July, while the new orders and new export orders sub-indices remained firmly in negative territory and manufacturers maintained a hiring halt.

"The fiscal policy stance remains quite restrictive, which may have contributed to the weak economic momentum," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

"To achieve economic stabilisation, the fiscal policy stance needs to become much more supportive. With the U.S. economy slowing, exports may not be as reliable a source for growth as it was in the first half of the year," he added.

Policy advisers are pondering whether Beijing may decide in October to bring forward part of next year's bond issuance quota if growth does not