A survey released Friday indicates China’s manufacturing slowed in December for a second month because of weak global demand and U.S. and European financial problems.

The latest HSBC Purchasing Managers Index, designed to preview the state of Chinese industry before official output data are published, stood at 48.7 in December from a 32-month low of 47.7 in November.

A reading above 50 indicates expansion, while a reading below 50 suggests a contraction.

HSBC’s chief economist, Qu Hongbin, said that the pace of slowdown is stabilizing. But he added that weakening external demand is starting to have its effect on the domestic economy.

He added that China could avoid a deeper economic slump so long as policy easing measures filter through in the coming months.

Qu said the latest data will add pressure on Beijing to ease spending and lending controls to stabilize growth and spur job creation.

Beijing wants to prevent a sharp slowdown in the economy, but at the same time, wants to avoid re-igniting inflation.