China's manufacturing activity continues to expand in July

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China's manufacturing sector expanded for the 12th straight month in July, the National Bureau of Statistics (NBS) said Monday.

The country's manufacturing purchasing managers' index (PMI) came in at 51.4 in July, down from 51.7 in June, according to NBS data.

A reading above 50 indicates expansion, while a reading below reflects contraction.

The PMI has remained between 51 and 52 over the past seven months, and the July reading was basically flat with the average of the first half of the year, said NBS senior statistician Zhao Qinghe.

Zhao attributed the slower expansion to sustained hot weather across China, rainstorms and floods in certain regions, and the fact that some companies conducted routine equipment checks and repairs.

Sub-indices for production and new orders came in at 53.5 and 52.8, respectively, down from 54.4 and 53.1 last month, but the narrower gap between them suggested an improved supply and demand relationship, Zhao said.

External demand growth also retreated, with the sub-index for new export orders falling to 50.9 from 52 in June.

The PMI for oil processing and coking as well as the nonmetal mineral products industry stayed below 50 for a third month in a row, affected by overcapacity and restructuring.

Despite the slower manufacturing activity expansion, firms continued to increase purchases with stronger confidence about their future growth, according to Zhao.

The sub-index for the quantity of purchases rose to 52.7 from 52.5 in June, while that for expectations on production and business operations climbed to 59.1 from 58.7, the third consecutive month of increase.

In addition, nearly 40 percent of surveyed companies reported higher labor costs, said Zhao.

Monday's data also showed that China's non-manufacturing sector expanded at a slower pace in July, with non-manufacturing PMI standing at 54.5, down from 54.9 in June.

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