SHANGHAI (AP) -- China's manufacturing lagged further in July, growing by its slowest pace in eight months on weakening export and domestic demand, despite other signs that Beijing's efforts to revive growth might be taking hold.
The state-affiliated China Federation of Logistics and Purchasing said Wednesday that its purchasing managers' index, or PMI, fell 0.1 percentage point to 50.1 in July, slightly down from 50.2 in June and just above the 50 level that signifies expansion. The index was at 50.4 in May, 53.3 in April and 53.1 in March.
"The index dropped with off-season declines in production and construction, allowing little evidence the economy is bottoming out," the federation said in its report. "Current demand is weak and downward pressure has yet to eliminate oversupply."
China's growth fell to 7.6 percent in the second quarter, relatively robust but weak compared with years of double-digit growth.
The slump comes at a sensitive time for the ruling Communist Party, which is preparing to hand power to a younger generation of leaders this year.
China has cut interest rates and slashed gasoline and diesel retail prices while moving cautiously with a "mini-stimulus" plan, mindful of the painful hangover of inflation, wasteful construction and debt from its 4 trillion yuan ($586 billion) avalanche of spending in response to the 2008 global crisis.
The government has promised to pump more money into the economy with spending on low-cost housing, airports and other projects.
Still, industries such as oil and food processing, electrical machinery, transport, aerospace and communications equipment showed expansion, especially for large manufacturers, while production by smaller companies continued to contract.
"Helped by effective policies, future market demand is expected to be steady," federation economist Zhang Liqun wrote in the report. "Economic growth will stabilize or accelerate."
Still, weakness in the global economy is taking a heavy toll, with the index for new export orders falling nearly 1 percentage point to 46.6, the report said.