China December official factory PMI at 49.7, shrinks for fifth month

China's first official economic report of 2016 suggested manufacturing weakened for a fifth straight month in December, the longest such streak since 2009, even as a separate gauge tracking services rose to the best level in more than a year.

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.

China is set to release fourth quarter and full-year GDP data on January 19.

A reading below 50 points suggests a contraction in activity, while a reading above indicates an expansion on a monthly basis.

"The improvement in the index suggests growth momentum has continued to stabilize, in part due to the government's stimulus efforts", Bloomberg Intelligence economist Fielding Chen (陳世淵) said.

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

"Although the PMI slightly rebounded this month, it still lies below the critical point and is lower than historic levels over the same period", said Zhao Qinghe, senior statistician at the national bureau of statistics, in a statement on the bureau's website.

Total new orders - a proxy for both domestic and foreign demand - rose to 50.2 in December from November's 49.8, the PMI survey showed.

China's new home prices increased in December for the fifth straight month, a survey showed yesterday, following a series of stimulus measures aimed at boosting lending.

China's property sector has come under pressure in the past two years as new buyers were priced out of the market while the economy falters.

The PBOC has cut interest rates six times since November 2014 and reduced banks' reserve requirement ratios (RRR), or the amount of cash that banks must set aside as reserves. Many believe that the People's Bank of China would have to introduce further easing measures in the near term in order to support the economic growth and keep a close watch over the real estate bubble now present in the economy.

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