The Markit Chinese manufacturing purchasing managers’ survey seems to be less reliable than its official counterpart but today’s flash results for February are consistent with the view here that downside economic risks have increased, warranting policy easing beyond the 0.5 percentage point cut in reserve requirements announced over the weekend.

The key new orders index was flat at 49.1 in February despite a positive impact from an earlier-than-normal New Year holiday, while the finished goods inventories index rose – a probable dampener on production plans.

The official survey, released next week, deserves more weight and may confirm weakness, judging from a leading indicator derived from the OECD’s Chinese leading index – see chart.

The Eurozone flash PMIs also released this morning did not, as suggested in a post yesterday, surprise positively but the manufacturing new orders and services new business indices continued to recover, reaching their highest levels for seven and six months respectively – the message from the earnings revisions ratio was directionally correct.