China's manufacturing activity slipped to its lowest in eight months in March this year, showing persistent weakness in the world's second-biggest economy.

The Markit/HSBC Purchasing Managers' Index (PMI) slipped to 48.1 in March this year, from 48.5 in the corresponding month of the previous year. It may be noted here that a reading of below 50 indicates contraction, while a reading of above 50 indicates expansion in a sector.

The decline in reading surprised economists as well as they were expecting a slight improvement in it as economic activity in the country often improves after the effects of the Lunar New Year holidays are over.

Stats for industrial production, retail sales, as well as fixed-asset investment all showed contraction in the first two months of this year.

Yao, a senior economist at Societe Generale in Hong Kong, said, "Usually, for the month of March, the PMI will rebound, because after Chinese New Year, there should be some activity coming back, but this PMI is disappointing."

HSBC economist Qu Hongbin said the Chinese economy continued to suffer decline in growth momentum, and that there was a weakness is due to softening domestic demand. He added that the government would likely launch new policy measures to arrest decline.

The Chinese government has set an economic growth target of 7.5 per cent for whole of this year, but some investment banking giants have already slashed their estimates for the economy. While J. P. Morgan trimmed its estimate from 7.4 per cent to 7.2 per cent; Bank of America Merrill Lynch cuts its estimate from 8 per cent to 7.3 per cent.