THE country’s factory activity contracted for the first time in over two years in December, highlighting the challenges facing the government.

The official Purchasing Managers’ Index (PMI) — the first snapshot of China’s economy each month — fell to 49.4 in December, below the 50-point level that separates growth from contraction, a National Bureau of Statistics (NBS) survey showed Monday.

It was the first contraction since July 2016 and the weakest reading since February 2016. Analysts had forecast it would dip to 49.9 from 50.0 the previous month.

China is expected to roll out more economic support measures in coming months on top of a raft of initiatives this year.

In November, industrial output rose the least in nearly three years, while earnings growth at industrial firms fell for the first time in nearly three years.

A PMI sub-index on overall factory output prices fell to 43.3 in December from 46.4, signaling earnings erosion. A gauge on overall production fell to 50.8, the lowest since February, from 51.9.

New orders — an indicator of future activity — continued to soften. A sub-index for total new orders contracted for the first time in at least a year, falling to 49.7 amid persistently weak demand at home and softening global growth.

New export orders shrank for a seventh straight month, with the sub-index falling to 46.6 from 47.

“There are many short-term orders from overseas but few long-term orders received by Chinese factories as caution remains amid the trade uncertainties,” said Nie Wen, economist at Hwabao Trust in Shanghai.

One bright spot in the downbeat data was a modest pickup in the services sector. The official non-manufacturing PMI rose to 53.8 from 53.4.

There are also signs China’s booming e-commerce may have started to moderate, with the country’s express delivery sector seeing slightly slower revenue growth towards year-end.

The courier sector raked in 542.88 billion yuan (US$79 billion) in revenue in the first 11 months, up 22.3 percent from a year earlier, Xinhua reported Monday, citing the State Post Bureau.

That was slower than the 23.5-percent growth in the first 10 months, and less than the 24.7-percent clip for all of 2017.

(SD-Agencies)