Beijing: Chinese manufacturing activity picked up marginally in January but still contracted, a closely watched gauge indicated, as growth in the world's number two economy slows down.
British banking giant HSBC said a preliminary reading of its purchasing managers' index (PMI) showed it had edged up to 49.8 this month from a final reading of 49.6 in December.
The December figure marked the first contraction since May. Readings above 50 point to growth, while anything below suggests shrinkage.
The index, compiled by information services provider Markit, tracks activity in China's factories and workshops and is a closely watched indicator of the health of the Asian economic giant, a key driver of global growth.
"The manufacturing slowdown is still ongoing amidst weak domestic demand," Qu Hongbin, HSBC's economist in Hong Kong, said in the statement.
"More monetary and fiscal easing measures will be needed to support growth in the coming months," he said.
China's economy has been hit by manufacturing and trade weakness as well as declining prices for real estate, which has hammered the key property sector.
It grew 7.4 percent in 2014, slower than the 7.7 percent in 2013 and the worst since the 3.8 percent recorded in 1990.
China's top leaders say they are ready to tolerate slower expansion as the government seeks to shift the economy away from one driven by investment and exports towards greater consumption, ultimately making growth more sustainable.
Premier Li Keqiang said this week at the World Economic Forum in Davos that he was determined to bring changes that would deliver "quality growth" rather than just a high top-line figure.
But authorities last year did not take an entirely hands off approach to the growth slowdown, implementing a series of targeted measures analysts described as "mini-stimulus".
In November the central People's Bank of China cut interest rates for the first time in more than two years to try to put a floor on the slowdown.
Economists broadly expect further monetary policy tinkering this year but say the focus will be on reforms over the temptation of major stimulus.