The manufacturing sector expanded at its slowest pace in 28 months in June, with the Purchasing Managers Index (PMI) falling 1.1 percentage points month on month to 50.9 percent, according to the China Federation of Logistics and Purchasing (CFLP).
It is the third consecutive month of decline for the PMI, a gauge of manufacturing expansion, in China, as the government fights soaring prices by withdrawing liquidity from the market.
The PMI figure was 52 percent in May, 52.9 percent in April, 53.4 percent in March, 52.2 percent in February and 52.9 percent in January.
A reading above 50 percent indicates economic expansion. One below 50 percent indicates contraction. China's PMI has stayed above the boom-or-bust line for 27 months in a row.
Concerning the sub-indexes, the purchase price index, which measures the cost of raw materials, led the declines with a month-on-month drop of 3.6 percentage points in June, while the new orders index, which reflects domestic demand, fell 1.3 percentage points from May to 50.8 percent in June.
The CFLP data also showed that the backlog orders index and raw material inventory index posted declines of more than 1 percentage point last month.
"The PMI decline in June shows that the country's economy is likely to grow at a slower pace this year," Zhang Liqun, a researcher with the Development Research Center of the State Council, said in the CFLP statement.
To break down the June data by 20 industries, the PMI reading for 12 sectors such as electronic machinery and food processing and manufacturing remained above the boom-or-bust line of 50 percent, while the reading for chemical and textile industry as well as transportation equipment manufacturing was below 50 percent.
The PMI data from the logistics federation and the National Bureau of Statistics was higher than the HSBC's index of 50.1 percent compiled by the Markit Economics Ltd.
