A key measure of manufacturing activity in China has dropped below the 50-point boom-or-bust line for three consecutive months.

The Purchasing Managers' Index for December stood at 49, down 0.4 points from November. The National Bureau of Statistics conducts a survey of 3,200 manufacturers to compile the index. Figures above 50 represent growth, and those below indicate contraction.

The country's domestic demand has been stagnant due to a prolonged slump in the real estate sector and a sluggish job market. Weak export-related orders are another factor.

The index for large companies came in at 50. But smaller firms were cautious on the economic outlook, with the readings showing 48.7 for midsize enterprises and 47.3 for small firms.

The gauge for non-manufacturers, including those in the service sector, rose by 0.2 points to 50.4.