There’s no way to put a smiley face on the latest factory data from China.

The preliminary Caixin China Purchasing Managers’ Index continued to weaken in September for its sharpest contraction in 78 months. September’s index fell to 47 from the sector’s final PMI reading for August of 47.3. Any reading above 50 points to business growth, while anything below 50 signifies contraction.

The bearish signal from China’s factory sector caused Asian stocks to post their biggest single-day fall in a month on Wednesday. The Shanghai Composite Index fell 2.16%. A deeper China downturn is fueling fears that the global economy is losing steam.

Caixin said the index components also showed that manufacturing output also decreased in September at the fastest rate seen in 78 months. New orders fell more sharply month-on-month in September than between July and August, and manufacturers continued to shed workers. Both input and output prices continued falling, indicating a lack of momentum for inflation.

“The principle reason for the weakening of manufacturing is tied to previous changes in factors related to external demand and prices,” said Dr. He Fan, chief economist and director of research at Caixin Insight Group, a financial data and analysis platform that complements Caixin Media’s news services.

But Fan points to hopeful signs that government stimulus measures are taking hold. “Fiscal expenditures surged in August, pointing to stronger government efforts on the fiscal policy front,” he said. “Patience may be needed for policies designed to promote stabilization to demonstrate their effectiveness.”

China devalued its currency last month to boost exports and growth. The central bank also cut interest rates for the fifth time since November. Asia Unhedged thinks regulators need to do more — much more to get the Chinese economy back on track.

The final PMI for September will be released on October 1.

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