China's official gauge of its manufacturing sector slipped to a five-month low in January, the government announced Saturday, confirming a slowdown in factory activity in the world's second largest economy. The monthly purchasing managers' index (PMI) declined to 50.5 in January after recording 51 in December and 51.4 in November, according to the government's National Bureau of Statistics and the China Federation of Logistics and Purchasing. Any figure above the 50 mark indicates expansion of manufacturing activity while anything below that signals contraction. All major components of the PMI index, from new orders to production, declined, indicating downward pressure on the economy, state news agency Xinhua reported. The decline "could be largely due to the (Spring) festival effect," ANZ bank said in a note, referring to the annual Chinese lunar new year holiday when millions of migrant workers down tools and return to their homes. The Year of the Horse began on Friday but the widespread closure of factories and workshops started several days earlier. HSBC bank announced on Thursday that China's manufacturing sector shrank in January for the first time in six months, with the PMI index recording 49.5, placing it in contraction territory. Qu Hongbin, HSBC bank's economist in Hong Kong, described it as "a soft start to China's manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January". China recorded annual GDP growth of 7.7 percent in 2013, the government said in mid-January, indicating it maintained its slowest expansion in more than a decade.