(Yicai) Jan. 2 -- Activity in China's manufacturing sector fell for the third month in a row in December due to factors such as off-season production levels in some basic raw material industries.

The manufacturing purchasing managers' index was 49 last month, down from 49.4 in November, data from the National Bureau of Statistics showed on Dec. 31. The figure was 49.5 in October and 50.2 in September. Fifty is the dividing line between contraction and expansion.

Over the whole of last year, the manufacturing PMI averaged 49.9, compared with 49.1 in 2022. 

Manufacturing output was relatively stable last month, with the production index falling 0.5 percentage point to 50.2 percent from a month earlier but remaining in expansion territory for seven consecutive months.

Because of the seasonal slowdown in inventory stocking in the European and US consumer markets, the increasing pressure on major foreign economies, and the Red Sea situation, the demand for exports from manufacturers has shrunk, said Wen Tao, an analyst at the China Logistics Information Center.

The new export orders index fell 0.5 point to 45.8 percent last month, the lowest level in 2023, Wen pointed out.

Lower external demand led to an overall tightening of demand in the manufacturing sector, with the new orders index dropping 0.7 point to 48.7, the NBS data showed. The percentage of manufacturing firms experiencing insufficient demand rose for the third consecutive month to 60.8 percent from 60.6 in November.

The economy will continue to pick up this year, Wen predicted, noting that December’s production and operation activity expectation index was 55.9, up for the third month in a row.

Since the beginning of last year, manufacturing in major economies, including some in Europe and the United States, has been contracting, noted Zhao Qinghe, a senior statistician at the NBS. The preliminary manufacturing PMI of the United States was 48.2, and that of the euro area was 44.2, according to Zhao. 

Some Chinese companies reported that the decline in overseas orders and the lack of effective domestic demand are the main difficulties, Zhao said.

The non-manufacturing PMI was 50.4 percent in December, up 0.2 point from a month earlier, the figures showed.

Editors: Shi Yi, Martin Kadiev