New | Confidence plunges as China woes intensify

Analysts' confidence in the business conditions in China plunged this month to the lowest level in more than two years as the unexpected yuan devaluation, gloomy economic data and a prolonged stock market rout point to an intensifying slowdown that Beijing is struggling to overcome.

The JP Morgan Research Sentiment Index, which tracks morale among analysts covering China, slumped to 39.3 from 54.6 last month, the third lowest level since the indicator was launched by the New York-based bank in August 2012.

It is the first time in 10 months that the gauge has fallen below the 50-mark level. It is also the latest sign that China watchers have begun to adopt a murkier outlook than ever for the world's second-biggest economy, on back of the shock yuan devaluation this month and a raft of downbeat economic figures that have already sent markets reeling at home and abroad.

"For the sentiment to improve, we need to see more growth momentum in the real economy. But it is very likely that the economy will continue to be sluggish and the PMI (purchasing managers' index, a gauge of manufacturing activity) figure will stay in contraction territory in the mid-term," said Liu Ligang, the chief greater China economist at ANZ Bank.

Analysts scaled back their estimates on 13 sectors, with sentiment indicators on transport, banks, small caps and property industries slumping the most from a month earlier, while only cement, ports, gas, metal and mining sectors saw improved readings.

Confidence in factory production and new orders, a crucial indicator of demand conditions, also faded. The measure on new orders dipped to the lowest level on record, at 29.7 from 61.6 in July, while the gauge on output slid to 39.9 from 48.1.