The British banking giant’s final reading of China’s purchasing managers’ index (PMI), which tracks manufacturing activity in factories and workshops, fell to 49.5 this month.

It was its lowest figure since April, coming in just below analysts expectations of 49.8 and down from 50 in November.

The index is a closely watched gauge of the health of the Asian economic powerhouse. A reading above 50 indicates growth, while anything below signals contraction.

Qu Hongbin, the bank’s economist in Hong Kong, said that price indices had also fallen sharply.

“The manufacturing slowdown continues in December and points to a weak ending for 2014,” he said.

“The rising disinflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months.”

The index tracks activity in China’s factories and workshops and is a closely watched indicator of the health of world’s second-largest economy, a key driver of global growth.

HSBC will publish its final reading for December on January 2, it said.

The preliminary PMI result came after China’s economy in the third quarter grew at its slowest pace since the global financial crisis. It has showed continued weakness in the current fourth quarter.

The central People’s Bank of China last month cut interest rates for the first time in more than two years to jolt slowing growth, with analysts expecting further easing steps.

China’s official PMI released by the National Bureau of Statistics came in at 50.3 in November, the weakest since an identical reading in March.

The government on Friday announced that industrial output expanded at its slowest pace in three months in November, while retail sales and fixed asset investment data also pointed to weakness.

The data came after a key annual meeting last week where China’s top leaders stressed the need to adapt to the economy’s “new normal” -- an increasingly popular official expression for slower but more sustainable growth.

With Agence France-Presse