China manufacturing activity falls to 7 month low

China's manufacturing activity fell to a seven-month low in December, preliminary results of a business survey by Markit Economics and HSBC Ltd. showed Tuesday.
The HSBC Flash China Manufacturing Purchasing Managers Index (PMI), a gauge of nationwide manufacturing activity of the world's second-biggest economy, slipped to 49.5 from November's final reading of 50.0 on a 100-point scale. It was the first time that the index dipped below the 50-mark since May, when it marked 49.4. A PMI reading above 50 percent indicates growth from the previous month, while a reading below 50 represents contraction in China's manufacturing sector. The index is a closely watched barometer of the health of the Chinese economy. "Domestic demand slowed considerably. Price indices also fell sharply," HSBC economist Qu Hongbin said in a statement accompanying the data.
"The manufacturing slowdown continues in December and points to a weak ending for 2014. The rising deflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months "said Qu.
China's economy expanded 7.3 percent year-on-year in the third quarter, the slowest pace of expansion since the first quarter of 2009.