The Purchasing Managers' Index (PMI) for China's manufacturing sector stood at 51.2 percent in July, down 0.9 percentage points from the previous month, the China Federation of Logistics and Purchasing(CFLP) said here Sunday.

The PMI includes a package of indices to measure manufacturing sector performance. A reading above 50 percent indicates economic expansion, while that below 50 percent indicates contraction.

The index is down for the third consecutive month, but it was the 17th straight month that it stayed above 50 percent.

The index hit a record low of 38.8 percent in November 2008 when the global financial crisis started to weigh on China's economy. The last time the index fell below 50 was February last year.

"The slowed manufacturing sector growth indicated a further slowdown in the country's economic growth," said Zhang Liqun, a researcher with the State Council's Development Research Center.

According to the CFLP, 10 sub-indices such as production, new orders and purchasing prices all declined, but the employment index was up.

China's gross domestic product (GDP) grew 10.3 percent between April and June, retreating from the 11.9 percent growth in the first three months, as the effects of the 4-trillion yuan stimulus packages weaned off which eased fixed-asset investment expansion.

However, Zhang believed that as both domestic and global market improved, there is much room for the government to fine tune its macro policies. Therefore, a significant drop in investment growth and a decline in export is not likely to happen.

"The economic growth for the whole year is expected to stay around 9.5 percent," he said.

The People's Bank of China (PBOC), the central bank, said last week that while it is possible for China's economic growth to slow, the economic fundamentals remain strong, and the chance for a "double dip" is seen as slim.