China’s manufacturing sector contracted for a fifth straight month in December

China’s manufacturing sector contracted for a fifth consecutive month in December – representing the longest period of continuous deterioration since 2009.

The National Bureau of Statistics revealed that the official Purchasing Managers’ Index (PMI) climbed up to 49.7 in December from a three-year low of 49.6 in November. The December reading was in line with what analysts had forecast.

Any reading below 50 indicates contraction.

The PMI survey revealed that total new orders, an indicator of foreign and domestic demand, rose to 50.2 in December from 49.8 in November.

Export orders also shrank for 15th consecutive month, up to 47.5 in December from the previous month’s reading of 46.4.

The National Bureau of Statistics said in a statement that despite a slight improvement on the supply and demand sides, there is still significant downward pressure for the sector.

Manufacturers were affected by plunging oil prices, lack of cash at the end of the year, and drops in the wholesale and raw material purchase price indexes.

Fielding Chen, an economist at Bloomberg Intelligence in Hong Kong, wrote:

“The improvement in the index suggests growth momentum has continued to stabilize, in part due to the government’s stimulus efforts.

“Nevertheless, another reading below the 50 threshold that separates expansion and contraction suggests the economy stays broadly weak.”

Chen added that while China likely reached its 2015 growth target, “the economy remains broadly weak with substantial downside risks,”

Meanwhile, the official non-manufacturing Purchasing Managers’ Index (PMI) rose to 54.4, from November’s 53.6.

Chinese economic growth is forecast to fall from 7.3 percent in 2014 to 6.9 percent in 2015, and could drop to 6.8 percent in 2016.

Official 2015 GDP data is expected to be released on January 19.