The final reading of China's purchasing managers index (PMI) for the country's manufacturing sector fell to 47.6 in August from 49.3 in July, the lowest reading since March, 2009, driven mainly by a sharper contraction of new orders, according to a report released by the HSBC on Monday.

A PMI reading above 50.0 indicates expansion in manufacturing sector activity while readings below 50.0 indicate contraction.

The August data extended China's manufacturing contraction through to its tenth consecutive month.

According to the report, the renewed decline of output activity which printed 48.2 in August was led by weaker new orders, which fell to a nine-month low to 46.1. In particular, the new exports orders print dropped to 45.5 in August, its lowest since March, 2009.

A lack of new business pushed the finished goods inventory index to an all-time high of 54 in August.

The deterioration in manufacturing activity led to the sixth successive month of deteriorating employment conditions. August saw the steepest rate of employment contraction since March, 2009 to 47.6.

Qu Hongbin, Co-head of Asian Economics Research at HSBC, said the August data confirmed that manufacturing sector is still facing strong downward pressure.

He said, besides collapsing new export orders, the record high levels of finished goods inventory and successive contraction in employment conditions all indicate increasing difficulties ahead.

"All these means that Beijing needs to step up policy easing if both growth and job market conditions are to be stabilized," said Qu.