China's manufacturing activity expanded at the slowest pace in eight months in July as export orders declined the most in more than two years, survey results from IHS Markit showed Wednesday.
The Caixin Purchasing Managers' Index fell to 50.8 in July from 51.0 in June. Although the indicator remained above the neutral 50.0, the score suggested the weakest growth since November 2017.
Manufacturers increased their production at softer pace in July. At the same time, new order growth eased for the second straight month as exports fell for the fourth month in a row.
New export business declined at the quickest pace for just over two years amid reports of subdued market conditions.
Employment across the manufacturing sector continued on a downward trend in July, with some companies lowering staff due to company downsizing.
On the price front, survey data showed that average input costs rose solidly, despite the rate of inflation softening since June. Companies widely linked higher cost burdens to greater raw material prices.
Meanwhile, factory gate prices increased at only a moderate pace that was the slowest recorded for three months.
Optimism among manufacturers towards the year ahead remained relatively subdued amid concerns surrounding tough market conditions, strict environmental policies and the potential impact of the US-China trade war.
Julian Evans-Pritchard, an economist at Capital Economics, said the PMI reading suggests that the sector lost a little momentum in July.
Further weakness ahead is expected as the manufacturing sector sees increasing headwinds from the slowdown in credit growth, the economist said. US tariffs will also be a drag, weighing on investment and foreign demand.