BEIJING -- A key gauge of factory output edged down last month, pointing to slowing momentum in China's economy, though leaving it on target to hit the government's growth target of at least 6.5% for 2016.

China's official manufacturing purchasing managers index fell to 51.4 in December from 51.7 the previous month, according to official data released Sunday, indicating the world's second-largest economy continued to expand, though at a slower rate. The index has stayed above the 50 mark that separates an expansion of activity from a contraction for five straight months.

"The momentum is becoming less strong, but it's still in expansionary territory," said HSBC economist Ma Xiaoping. "The momentum will weaken further, but not likely run into contraction in coming months."

The slightly weaker PMI reading for December comes as Beijing pulls back from the easy money policy it depended on much of the year to bolster the economy. Policy makers are confident the economy will reach the annual growth target of 6.5% to 7%, while they are growing increasingly concerned about rising corporate debt levels, economists said. China's nonfinancial corporate debt is about 145% of gross domestic product, which is "high by any measure," according to the International Monetary Fund.

Components of the PMI showed stable demand, which would likely cushion any slowing of growth, economists said. A subindex measuring new orders held steady from 53.2 in November, while a production subindex decreased to 53.3 from 53.9, the government's statistics bureau said.

"As long as there is demand, the production will not be too much affected," said Zhang Yiping, an economist at China Merchants Securities.

Economic growth in each of the first three quarters of 2016 was 6.7% and the fourth quarter is expected to come in close to that figure when results are announced later this month.

At a key economic conference last month, Chinese leaders signaled less expansionary policies for this year and called for dealing with soaring prices in residential property and emerging bubbles other parts of the economy. Such policies, economists said, could create headwinds for manufacturers, particularly large state-owned companies in industries suffering from overproduction and high debt levels.

In recent months, Beijing's efforts to cool the property market have begun to affect other parts of the economy. Restrictions have been imposed for purchasing homes in at least 20 major real-estate markets in a bid to ease speculative pressure that is starting to cool this hugely important sector.

This deceleration is starting to cool factory output in industries related to raw materials, such as copper and steel production, and construction and interior design, said HSBC's Ms. Ma.

Manufacturing activity was helped in December by improved exports, which rose 0.1% year on year in November, their first increase since March and a reversal of October's 7.3% decline.

Meanwhile, China's official nonmanufacturing purchasing managers index, a measure of activity in the services sector, fell to 54.5 in December from 54.7.

--Pei Li and Dominique Fong