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China's factory activity falls for the first time in 2-1 / 2 years: Official PMI By Reuters

© Reuters. FILE PHOTO: Employee is working on production line producing light trucks at a JAC Motors factory in Weifang

BEIJING (Reuters) – China's factory activity contracted in December for the first time in over two years, with a further sign of weak demand and increasing pressure on the world's nest largest economy when entering 201[ads1]9.

The official purchasing manager's index (PMI) fell to 49.4 in December below the critical 50-point difference separating growth from contraction, according to data published by the National Bureau of Statistics (NBS) at Monday.

It was the first contraction since July 2016 and the weakest PMI reading since February 2016 when it reached 49.0. Analysts examined by Reuters had expected the official gauge to fall to 49.9 for the month.

The increasing burden on the factories signals a continued loss of economic momentum and increases the risk for both China and the world economy, especially if trade tensions in China and the US continue.

There are already signs that trade liberties between the economic giants are damaging global supply chains with concerns the effects may be more pronounced next year in a battle against world trade and investment.

Chinese authorities are expected to roll out more supportive measures in addition to a number of policy measures this year. A prolonged downturn in the manufacturing sector, key to jobs and the overall health of the economy, are likely to take further steps to supply domestic demand.

There is also uncertainty as to whether China and the United States can bridge their differences during a temporary ceasefire in their trade war.

At the beginning of this month, US President Donald Trump and Chinese President Xi Jinping came to a 90-day truce that delayed the planned January. 1 US $ 200 billion US dollar tariff increase while negotiating a trade deal.

New export orders were signed for a seventh straight month on failing external demand, with the sub-index falling to 46.6 from last month's 47.0 reading.

"There are many short-term orders from abroad, but few long-term orders received by Chinese factories are cautious among commercial uncertainties," said Nie Wen, economist at the Hwabao Trust in Shanghai, said before the PMI release.

"The medium and long-term The export prospect is not very optimistic. "

Similarly, the activity meter, the official PMI, which was also released on Monday, rose to 53.8 from 53.4 in November, well above the 50-point mark that separates the growth from contraction.

The service sector accounts for more than half of China's economy, with rising wages giving Chinese consumers more expense, but consumer demand and confidence has recently been a sign of increasing pressure on the economy

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