A contraction in Asian manufacturing spread in August as new export orders fell across the region from China to India, showing the euro zone debt crisis was having a deepening impact on the global economy.
China's official purchasing managers' index fell below the 50 level that demarcates expansion from contraction for the first time since November 2011, while a similar survey from HSBC showed activity shrinking at its fastest pace since March 2009.
HSBC PMIs covering other major exporters painted a similar picture. South Korea's reading was below 50 for the third month in a row and Taiwan's PMI hit its lowest level since November.
The reports showed new orders, including new export orders, under pressure as fears grow the euro zone is sliding into recession and the United States struggles to build up any economic steam.
Even in India, where the manufacturing sector has expanded without a break for more than three years, new export orders fell in August at their steepest pace since October last year. Indonesia's factory activity also expanded in August, but new export orders fell for the fifth month in a row.
Similar data expected in coming days from the euro zone and the United States is unlikely to lift the gloom. Later on Monday, the EU Markit PMI is expected to show that the factory sector was contracting in August, while the U.S. Institute for Supply Management on Tuesday is forecast to show a reading of 50.
China's PMIs reinforced expectations that the pace of growth in the world's second-largest economy will weaken well into the September quarter.
The HSBC China PMI fell to a seasonally adjusted 47.6, its lowest level since March 2009. It followed China's official factory PMI on Saturday which fell to a lower-than-expected 49.2, the first time it had fallen below 50 since November 2011.
"Beijing must step up policy easing to stabilise growth and foster job market conditions," Qu Hongbin, chief China economist at HSBC said in a statement accompanying the survey.
Chief among manufacturers' concerns are the softness in new orders as demand falters, particularly from the euro zone. The HSBC new orders sub-index fell to its lowest point since March 2009.
"This, combined with a record high in stocks of finished goods sub-index, and a 41-month low employment index, suggests China's exporters are facing increasing difficulties amid stronger global headwinds," Qu said.
The official survey showed the new orders sub-index dropped for the fourth month in a row to 48.7, while export orders stabilised at 46.6, figures from the National Bureau of Statistics showed.
Expectations for when growth would pick up following six consecutive quarters of slowing down have been steadily pushed back deeper into 2012. Weaker-than-expected government data on the economy in July cooled market expectations again.
Beijing is moving cautiously in trying to support the economy in what it calls a "prudent" policy stance for fear of re-igniting property and inflation risks.
China cut interest rates in June and July and has been injecting cash into money markets to ease credit conditions. The latest data raises doubts as to whether Beijing has done enough to stop the slowdown from extending to a seventh quarter, so analysts believe it will take further steps to try to lift the economy.
In India, the HSBC PMI fell to 52.8 from 52.9 in July. However, it marked the lowest level in nine months.
"The momentum in the manufacturing sector eased further on the back of weak external demand and output disruptions caused by the major power failures in early August," said Leif Eskesen, an HSBC economist.
Power grids in sixteen states in northern India, home to almost half of the country's 1.2 billion people, collapsed last month to plunge the regions into darkness, highlighting the country's weak infrastructure.
Taiwan's PMI fell to 46.1 in August, its lowest level since November 2011, while Korea's PMI edged up to 47.5, although that marked the third straight month of contraction for the sector.
In contrast, Indonesia's PMI rose to 51.6 in August, the highest level in 10 months.
