(Yicai) Jan. 2 -- Activity in China's manufacturing sector stayed in positive territory for the second straight month in December, reaching the highest level since September, according to a widely watched private survey.

The Caixin manufacturing purchasing managers' index came in at 50.8 last month, up 0.1 point from November, data released by financial media group Caixin showed today. The figure was 49.5 in October. A reading above 50 indicates expansion.

Caixin’s manufacturing PMI diverges from the official manufacturing PMI, published yesterday by the National Bureau of Statistics, which fell for the third month in a row, contracting 0.5 point to 49, the joint lowest for last year along with June’s reading.

Manufacturing sentiment continued to improve, but internal and external demand is still insufficient, and the foundation for the economy to rebound still needs to be consolidated, said Wang Zhe, a senior economist at Caixin Insight Group. 

China still has fiscal and monetary policy room and policies to stabilize employment need to be further strengthened to ease job market pressure, Wang added.

Production and demand in the manufacturing sector expanded slightly faster in December, hitting the third-highest growth rates since June and March. According to the firms surveyed, demand picked up, new orders for consumer goods and intermediate products rose, and the decline in orders for investment products slowed.

In addition, external demand has improved marginally, with the new export orders index rebounding to the highest in nearly six months, though it remained in negative territory.

Pressure on the jobs market was unabated, with the employment index falling to its lowest since June. Companies were cautious about hiring, did not fill vacancies after staff left, and even downsized amid weak demand.

The business expectation index for manufacturing slid while staying in the expansion territory last month. Market confidence remained, but there is also concern about shrinking customer budgets, fierce competition, and sluggish market conditions.

Editor: Martin Kadiev