FXStreet (Mumbai) - The Caixin Purchasing Managers' Index (PMI) fell in December. The Caixin PMI data which focuses on smaller and medium-sized companies showed manufacturing PMI fell to 48.2 in December, down from 48.6 registered in November, contracting for a tenth month. It came in below the 49.0 figure broadly expected by analysts. The figures have once again raised fears of a slowdown of the economy. Markit noted that "client demand was weak both at home and abroad, with new export business falling for the first time in three months in December”. Slowdown in business activity has obviously impacted the financial performance of companies and Chinese industrial companies' profits was noted to have fallen 1.4 per cent on year in November, registering a sixth straight month of declines. Markit pointed out that this drop in demand and overall business activity led manufacturers to lay off employees and “reduce their purchasing activity in line with lower production requirements." The data has rubbed off on market sentiment as well. The Shanghai Composite was down as much as 4.1 per cent post the release of the data, Australian shares declines after initial gains. Official Manufacturing PMI The official PMI data released over the weekend was however a little better the Caixin PMI figures. The official manufacturing PMI came in at 49.7 in December, matching Reuters poll forecast and was even higher than November's 49.6. Total new orders increased to 50.2 in December from November's 49.8. Export orders however shrank for the 15th straight month. The official non-manufacturing PMI, which tracks the services sector, increased to 54.4 in December from 53.6 in November, showing China’s constant progress in moving towards a consumer led growth model. According to Zhou Hao, China economist at Commerzbank in Singapore, the little improvement in the manufacturing PMI indicates stabilization in growth momentum. He has however warned that the manufacturing sector is “still facing strong headwinds.” Need for more stimulus Chinese economic growth dropped below the 7 per cent mark for the first time since 2008-2009 global financial crisis in the third quarter. It had dropped to 6.9 per cent. According to the International Monetary Fund's latest "World Economic Outlook" report published in October, the Chinese economy is expected to register 6.8 per growth cent in 2015. The IMF forecast growth will further slowdown in 2016 to 6.3 per cent. Interest rate and reserve requirement ratio were slashed by the People's Bank of China to spur growth. The government stepped up spending on infrastructure projects as well as eased restrictions on home buying. From the current stream of data it seems that the measures have not been adequate. Leaders at the annual Central Economic Work Conference in December stressed that monetary policy will be more flexible in 2016. They also pledged to expand the budget deficit this year. Analysts are thus of the opinion that more easing measures are likely to be announced soon to support the growth rate. John Zhu, a greater China economist at HSBC feels the need for more easing in 2016. He told CNBC there is a requirement for “more aggressive easing on both monetary and fiscal policy to really provide a substantial boost to lift the economy away from this low growth or contractionary, deflationary state that we're in”. Economist Zhou Hao said "In order to facilitate the destocking and deleveraging process, monetary policy will remain accommodative and the fiscal policy will be more proactive." For more information, read our latest forex news.