Chinese Manufacturing Slips To Seven-Month Low

CHINA'S manufacturing activity weakened in June from the previous month, official figures showed yesterday, despite government efforts to arrest a slowdown in the world's second largest economy.

The official purchasing managers' index (PMI) slipped to 50.2 in June from 50.4 in May, the China Federation of Logistics and Purchasing said in a statement.

It was better than expected as economists had forecast the key index would slide into contraction for the first time since last November with an average forecast of 49.8, according to Dow Jones Newswires.
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A PMI reading above 50 indicates expansion, while a reading below 50 means contraction.

The industry group said the latest numbers showed downward pressure remained on China's economy but growth might have bottomed out.

''June PMI continued to fall, but with an obviously smaller margin, which indicates the fall in economic growth may stabilise,'' Zhang Liqun, of the Development Research Centre, said in the statement.

He cited government stimulus policies to spur investment and boost domestic consumption, as well as a rebound in exports as factors supporting growth.

China on June 8 cut interest rates for the first time in more than three years and has also trimmed the amount of cash banks must keep in reserve three times since December, most recently in May.

China's economy grew an annual 8.1 per cent in the first quarter of 2012 - its slowest rate in nearly three years.

The government will release the second quarter gross domestic product figure on July 13.