The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, fell to 51.2 in July from 52.1 in June. Numbers above 50 show manufacturing activity expanding.
The index, an indicator of future manufacturing trends, has remained above 50 for 17 straight months after slowing in late 2008 and early 2009. It was 53.9 in May and 55.7 in April.
Areas such as production, new orders and purchasing prices all declined, according to a summary of the survey posted on the federation’s website. Meanwhile, the employment index was up.
The slowdown was expected given efforts to cool property prices by tightening credit, as well as a tapering off of government-backed stimulus spending on construction and other projects. Economic growth slowed to 10.3 percent over a year earlier in the second quarter, down from its blistering 11.9 percent first quarter pace.
The slowdown might weaken the global recovery if it cuts Chinese demand for imported iron ore, industrial machinery and other foreign goods.
“The foundation for investment and export growth is not steady enough. There is a possibility that the speed of growth in those areas could decline by a large margin,” the summary quoted government analyst Zhang Liqun as saying.
However, Zhang predicted overall stable economic growth and expected growth for the whole year to be about 9.5 percent.