China's manufacturing activity continued to contract in December, marking the fifth straight month of shrinking for the sector and the longest such streak since 2009. While China's official manufacturing PMI ticked up slightly in December, it remained below the expansion threshold of 50, coming in at 49.7. Meanwhile, China's non-manufacturing sector, which includes services, saw its PMI rise to the highest level in over a year, signaling some improvement outside of manufacturing. Economists believe further monetary and fiscal stimulus will be needed to support China's cooling economy amid the ongoing contraction in manufacturing.

1. China’s manufacturing activity
shrinks for a fifth month

2. China’s economy started the year on
the back foot after data showed the
country’s mighty manufacturing
sector continued to shrink in
December.

3. 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
though the activity gauge ticked up slightly from
November.
The official manufacturing purchasing managers' Index
(PMI) – which tracks activity in the factories and
workshops sector – inched up to 49.7 in December from
a November reading of 49.6, which was a three-year
low, the National Bureau of Statistics (NBS) said Friday.
That compared with a median economists’ estimated of
49.8.

5. The mild improvement in the sluggish manufacturing follows
stepped-up stimulus measures from Beijing, including six interest
rate cuts in the year up to November as well as reductions in the
reserve requirement ratio for banks, freeing up cash for them to
lend. Economists said the continued contraction in manufacturing
portends more monetary and fiscal support.
Meanwhile, a separate gauge tracking services rose to the best
level in more than a year. The non-manufacturing PMI rose to
54.4, the highest since August 2014.
China's economic growth is expected to cool from 7.3 percent in
2014 to 6.9 percent in 2015, the People’s Bank of China said in a
recent work paper, the worst annual growth for 25 years.
Chinese shares settled lower on Friday, with the Shanghai
Composite shedding 0.93 percent to 3,539.6 at close.