|Xinhua File Photo
BEIJING, Aug. 1 (Xinhua) -- China's manufacturing sector expanded at its slowest pace in eight months, with the purchasing managers index (PMI) for the sector easing to 50.1 percent in July, down 0.1 percentage points from the previous month, according to official survey results published on Wednesday.
The PMI data released by the China Federation of Logistics and Purchasing (CFLP) and the National Bureau of Statistics suggested the manufacturing sector is still expanding even though the growth has slowed.
A reading of 50 percent demarcates expansion from contraction.
However, July's PMI reading was below market expectations. Analysts had forecasted that the official data could inch up from one month earlier.
A flash HSBC PMI reading published last week rose to a five-month high of 49.5 percent in July due to increased pro-growth measures.
The calculation of the official PMI data covers 820 enterprises, including state-owned and large enterprises, while HSBC's poll includes around 400 small- and medium-sized companies.
"The PMI moderation in July was driven partly by seasonal factors," said Cai Jin, vice president of the CFLP, adding that widespread rain last month slowed progress on many projects, dragging the PMI reading down.
"July's PMI slowdown was minimal, which suggested the economy is building up a foundation for stabilized growth," Cai said, but warned that "downward pressure still exists."
Manufacturing PMI has kept above the contraction level since November when the reading was 49 percent, with 50.3 percent for December, 50.5 percent for January, 51 percent for February, 53.1 percent for March, 53.3 percent for April, 50.4 percent for May and 50.2 percent for June.
"The decline in PMI continued to narrow in July, reinforcing signs that the country's economy is stabilizing," said Zhang Liqun with the Development Research Center of the State Council.
China's economy expanded at 7.6 percent in the second quarter, marking the first time that the country's economic growth rate has fallen below the 8-percent mark since the fourth quarter of 2009.
To buoy the economy, China has adopted a string of pro-growth measures, including lowering banks' reserve ratios and interest rates, subsidizing energy-saving household electrical appliances and speeding up approvals for major construction projects.
The output sub-index for July stood at 51.8 percent, down 0.2 percentage points from June, indicating that the production growth of manufacturing enterprises is still slowing.
Seven industries, including oil and food processing, electrical machinery and communications equipment, expanded, while 14 sectors, including the textile and auto industries, saw production continue to contract last month.
The sub-index for new orders continued to trend below the boom-bust line for three consecutive months by dipping 0.2 percentage points from June to 49 percent, signifying that the demand for China's manufactured goods is declining, according to the PMI report.
However, Zhang forecast a recover in market demand, saying "boosted by pro-growth policies, future market demand is expected to pick up slightly. Companies may no longer face reduced orders, and the economic growth will stabilize or accelerate."
The input price sub-index dropped 0.2 percentage points to 41 percent,which some analysts say may help bring down inflation and give more room to ease the tightening policies.
The sub-index for stocks of finished goods hit 48 percent, down sharply from 52.3 percent in June.
The slowing manufacturing activity was partly due to waning demand in Europe and the United States, the country's two largest trade partners which face debt and low-growth problems.
Chinese authorities on Tuesday reaffirmed that they will prioritize stable economic growth and adhere to a proactive fiscal policy and prudent monetary policy to counter the current economic hardships.
China still needs to consolidate the foundation of stabilized growth and pay close attention to overcapacity as the problem has not significantly been resolved, Zhang said.
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