BEIJING--A gauge of China's factory activity slipped in July, pointing to further sluggishness in the key manufacturing sector of the world's second-largest economy. Analysts said the relatively weak reading in the official China Manufacturing Purchasing Managers' Index reflected a continuing trend of weak demand at home and abroad, a battered property sector and added pressure from a swooning stock market. But economists also said that the government has vowed to press ahead with its accelerated spending on infrastructure to offset the difficulties as the economy struggles to gain traction. "Economic momentum is still very fragile," said Haibin Zhu, economist at J.P. Morgan. He said that government-sponsored investment is likely to continue to be relatively strong, helping support the economy. China's official manufacturing purchasing managers index slipped to 50.0 in July from 50.2 in June, the National Bureau of Statistics said Saturday. A reading of 50 is right at the cutoff point between expansion and contraction compared with the previous month. Subindexes showed weakness across a broad front, including output as well as new orders and new export orders along with employment and prices for materials. China's economy grew at a better-than-expected 7% in the second quarter from a year earlier--in line with the government's target of about 7% growth for the full year. But the second-quarter figure was still the slowest pace in six years and well below the double-digit growth levels recorded as recently as in all of 2010. Key industries such as steel, cement and mining continue to struggle with overcapacity. The once buoyant export sector has also been hurt by weak demand overseas. "Both domestic and external manufacturing remain weak," said Zhao Qinghe, an economist with the statistics bureau, in a statement accompanying the data on Saturday. He noted, however, that storms and flooding in key manufacturing centers in eastern and southern China also may have put a temporary dent in factory output in the period. The official gauge was still better than a competing measure compiled by research house Markit and Chinese media firm Caixin. Their preliminary PMI estimate was below the 50 level at 48.2--the lowest reading in 15 months. The nation's stock market saw a steep selloff that began in June and continued into July despite an aggressive government rescue program. Share prices in Shanghai were down 14% in July, the worst monthly performance since August 2009, triggering fears that damaged sentiment could spill over into the financial sector and the broader economy. Many companies--as well as individuals--have parked their funds in the market and a steep selloff could hit corporate profits as well as investment plans. "It's reassuring that the PMI didn't fall by a wider margin" said Julian Evans-Pritchard, a Singapore-based economist at research house Capital Economics. "A fall in equities can affect the [corporate] bottom line," he said. The July official PMI tally was just below the median forecast of 50.1 in a Wall Street Journal poll. It was also below the reading for a separate index covering the service and construction sectors known as the nonmanufacturing PMI. That reading edged higher in July to 53.9 against 53.8 in June. Grace Zhu contributed to this article
On Saturday , the China Manufacturing Purchasing Management ' Index for July showed that activity was slipping , pointing to continued growth in the country . According to the National Bureau of Statistics , the index slipped to 50.0 in July , down from 50.2 in June . A PMI reading above 50 indicates an expansion in manufacturing activity , while a reading below points to a contraction . Additionally , the official China Purchasing Managers ' Index ( [UNK] ) for July came in at 47.8 , lower than the preliminary reading of 48.2 , marking a two - year low .