Growth in China’s factory sector slowed as expected in December, a government study showed on Thursday, underlining the challenges facing the sector as manufacturers fight rising costs and softening demand in a cooling economy.

The official Purchasing Managers’ Index (PMI) slipped to 50.1 in December from November’s 50.3, but remained just above the 50-point level that separates growth from contraction on a monthly basis.

Analysts polled by Reuters had forecast a reading of 50.1.

Many analysts expect economic growth in the fourth quarter to slow marginally from 7.3 per cent in the third quarter, suggesting full-year growth will undershoot the government’s 7.5 per cent target and mark the weakest expansion in 24 years.

Economists who advise the government have recommended that China lower its growth target to around 7 per cent in 2015.

The government is expected to announce more stimulus measures in 2015, such as cutting bank reserve ratios or interest rates, to avert a sharper slowdown that could fuel job losses and debt defaults.

The central bank had unexpectedly cut interest rate for the first time in two years on November 21, while the economic planning agency has been approving more infrastructure projects to help spur growth.

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