The HSBC China Manufacturing PMI, or purchasing managers index, fell to 49.4 last month from 50.4 in June -- its first drop below the neutral 50 threshold since March 2009, the bank said.

A reading above 50 means the sector is expanding, while below 50 indicates an overall decline.

"This suggests that manufacturing production growth continued to decelerate last month, reflecting the combined effect of credit tightening, property cooling measures and Beijing's measures to cut capacity in energy-intensive sectors," said HSBC chief China economist Qu Hongbin.

Qu however said the world's third-largest economy was still expected to maintain growth of around nine percent despite the slowdown, thanks to huge infrastructure spending and resilient private consumption.

A separate survey published by a government agency on Sunday showed manufacturing activity slowed to 51.2 last month from 52.1 in June.

That was the lowest reading since February 2009, according to data released by the China Federation of Logistics and Purchasing (CFLP).

The heavy rains and massive floods that struck China in July contributed heavily to the weakening in manufacturing activity, economists with Nomura International said.

"Considering the heavy flooding around the country, we believe the July PMI print should be viewed as better than its headline values," they said in a research note.

"We judge that unless the flooding continues into August, the next official PMI print is more likely to show a rise than it is a fall."

HSBC's results are based on interviews with purchasing managers at more than 400 companies, while the survey by the CFLP covers more than 700 firms.

The HSBC survey showed the rate of decline in new work accelerated to the quickest pace seen since March last year, with many panelists citing lacklustre client demand as denting new orders.

Meanwhile, inflationary pressures eased substantially, with the measures for output charges and input prices falling almost 17 and 30 points respectively since the start of the year, the bank said.

The softening PMI data in July raised hopes that authorities will not launch new tightening measures to avoid a sharp economic slowdown, sending Chinese shares to a more than two-month high on Monday, up 1.33 percent at the close.

The Shanghai Composite Index, which covers both A and B shares, finished up 35.02 points, at 2,672.52 -- the highest since May 24.

China's economic growth slowed in the second quarter, as massive stimulus spending was scaled back and moves to rein in soaring property prices started to bite.

But gross domestic product nevertheless maintained its double-digit growth for the third quarter in a row, expanding 10.3 percent in the three months to June.

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News